THE FCA is expecting funders to provide a three-month payment holiday on lease rentals.
It wants to ease the financial pressures on consumers as a result of the coronavirus crisis. The FCA said this morning (17 April 2020):
“If customers are experiencing temporary financial difficulties due to coronavirus, firms should not take steps to end the agreement or repossess the vehicle.”
It also expects customers to be treated fairly and that there should be no changes made to agreements as a result of the payment holiday .
In particular customers with motor finance PCP agreements should not be discriminated against unfairly. The FCA said:
“Firms should not try to use temporary depreciation of car prices caused by the coronavirus situation to recalculate Personal Contract Purchase (PCP) balloon payments at the end of the term. We will expect firms to act fairly where terms are adjusted.
“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 financial difficulties, firms should work with the customer to find an appropriate solution.”
FCA guidance on regulated agreements
For the FCA’s full guidance on what it expects from funders and motor finance providers, you must read this: Motor finance agreements and coronavirus: draft temporary guidance for firms.
The FCA added that this measure was a temporary one and would review the situation. It planned to publish final guidance by Friday 24 April 2020, with its recommendations coming into force shortly after.
Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.