The Financial Conduct Authority (FCA) has updated its most recent guidance to extend the ban on home repossessions to 1 April 2021 after a rapid consultation with the wider mortgage industry earlier this month.
Home repossessions should only be enforced in very exceptional circumstances, the FCA regulator said.
The guidance on suspending repossession activity had originally been due to end on 31 January 2021, but following the government’s latest decision to extend lockdown restrictions with lockdown mark III and also continue with the furlough scheme, the regulator has now changed the rules.
However, some consumer credit firms will be able to repossess goods and vehicles from the end of January. The regulator has said this reflects the different risks and potential harms that consumers may face if they simply lost items on credit compared to losing the family home.
But, seizing items on credit should only be a last resort, according to the latest advice, and all businesses should very much consider the impact their actions will have on customers and especially their vulnerable customers.
Payment deferrals and credit reports
Most borrowers will now have until 31 March 2021 to apply for a deferral of payment for their, personal loans, credit cards, mortgages and any other types of consumer credit agreements CCA’s. Up to a six month payment break can be granted by lenders in total.
If the borrower and lender have put in operation an agreement to repay any deferred payments at the conclusion of the payment holiday, the FCA suggested it should not be reflected on the borrower’s credit file.
However, if the borrower is unable to agree a repayment plan directly after the payment holiday has finished because their lender is experiencing some operational difficulties and has a missed payment recorded on their credit file, all lenders are expected to work with credit referencing agencies to ensure this position is put right and quickly reversed.
See also rent protection insurance article.