FCA confirms finance protection details during coronavirus
24 April 2020
The Financial Conduct Authority has confirmed details of measures designed to protect motor finance customers struggling to meet payments due to coronavirus.
Measures designed to protect car finance customers include a three-month payment freeze and strict regulation around the fairness of PCP and PCH arrangements.
Under the temporary measures, first proposed a week ago, firms should not try to recalculate PCP balloon payments based on a temporary depreciation of car prices caused by the coronavirus situation. The FCA expect firms to act fairly where terms are adjusted.
The FCA statement added: “Where a customer wishes to keep their vehicle at the end of their PCP agreement, but does not have the cash to cover the balloon payment due to coronavirus-related payment difficulties, firms should work with the customer to find an appropriate solution. Given the increased potential for disparity between the balloon payment and the value of the vehicle in the current climate, firms should ensure that solutions do not lead to unfair outcomes. For example, refinancing the balloon payment might not be appropriate in the circumstances.”
Christopher Woolard, interim chief executive at the FCA, said: “We have worked at pace to introduce temporary financial relief tailored for a range of specific credit products. Many firms are already working with their customers, but these measures ensure all consumers affected by the coronavirus emergency can apply for a temporary freeze on their payments.”