The Financial Conduct Authority (FCA) has updated the guidance on consumer credit, enabling firms to repossess vehicles from 31 January 2021.
Published in November 2020, the regulators guidance previously stated that firms should not be able to terminate a regulated agreement or repossess vehicles under the agreement that the customer needs, except in exceptional circumstances.
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On 13 January, the FCA proposed a resumption of policy enabling consumer finance firms to repossess vehicles from 31 January 2021. Following a period for comment, the FCA have today published the finalised guidance.
According to the updated guidance: “Consumer credit firms will be able to repossess goods and vehicles from 31 January 2021.”
The FCA outlined that, until 31 January 2021, lenders should not repossess goods or vehicles that consumers need.
However, the authority stressed that repossession should only be a “last resort” and remain “in accordance with all relevant government public health guidelines, including on social distancing and shielding.”
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By GlobalDataThe statement continues: “Importantly, we expect firms to exercise particular care when dealing with vulnerable customers and carefully consider the potential impacts when deciding whether repossession of goods or vehicles is appropriate.
“Given ongoing uncertainties arising from the impact of coronavirus, we will keep our position under review and will update or amend our guidance, or provide new guidance, if it is required.”
During the initial lockdown, the entire repossession process was prohibited, whereas more recently, the rules only applied to physically recovering the car. This has provided time for finance companies to prepare for collections upon the termination of the ban.
According to a statement, the decision to extend the mortgage guidance and not that of consumer credit reflects the “different risks and harms that customers with goods or vehicles on credit are likely to face compared to those who are at risk of losing their home at this time”.
The FCA stated that support continues to be available for customers experiencing financial difficulties because of coronavirus.
