COVID-19 PAYMENT DEFERRALS

In light of the exceptional circumstances of COVID-19, the FCA have published a number of guidance papers and feedback statements covering large parts of the UK lending market, including guidance applicable to providers of the following lending products: 

• Personal loans (published on 9 April 2020 and came into force on 14 April 2020[1]);
• Credit cards and retail revolving credit loans (published on 9 April 2020 and came into force on 14 April 2020 [2]);
• High cost short term credit (published on 24 April 2020 and came into force on 27 April 2020[3]); 
• Right-to-own (RTO), Buy-now pay-later (BNPL) and Pawnbroking agreements (published 24 April 2020 and came into force on 27 April 2020[4]); and
• Motor finance (published on 24 April 2020 and came into force on 27 April 2020[5]).   

Common to all guidance is that firms should provide relevant customers with a temporary payment deferral during the current COVID-19 crisis. We have set out below a high level summary of the key elements of the guidance. Much of the guidance is the same for each of the lending products set out above, but where there are important differences we have called those out specifically. Importantly the guidance means that firms are facing significant regulatory challenges implementing the required payment deferrals for customers in a manner which complies with the complex regulatory requirements of the Consumer Credit Act 1974 (CCA). We have addressed this in more detail towards the end of this note.