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Six month payment deferral period for consumer credit poses risk to customers

Six month payment deferral period for consumer credit poses risk to customers

Commenting on the announcement today of the Financial Conduct Authority’s (FCA) intent to extend the payment deferral period for consumer credit customers to a maximum of six months, Stephen Haddrill, Director General of the FLA, said:

“Lenders are committed to supporting customers in financial difficulty and it is vital that this support is provided in a way that best serves their borrowers’ interests. 

“This is best achieved under existing FCA rules that require lenders to assess their customer’s position carefully. Giving borrowers the impression that a six-month deferral is always the right answer is dangerous.  It could leave people with unsustainable debts that they may struggle to repay.

“The FCA should limit its guidance on payment deferrals to three months at this stage as it did in March, so that there can be a full review of the policy by the FCA, and of individual circumstances by lenders before any extension. Without this, some people will continue deferring payments and accruing debt to their extreme detriment.  

“If HM Treasury and FCA press ahead with a deferrals policy until the end of March 2021 in spite of these risks, then furlough should also be extended well beyond one month to give more people a realistic chance of being able to better manage their repayments in the interim.”  

*Article Source http://www.financingyourcar.org.uk

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