Update on mortgages, consumer credit, banking and payments during coronavirus

FCA confirms update to guidance on mortgages and consumer credit repossessions

In November 2020, we published guidance which meant firms should generally not enforce repossessions before 31 January 2021. On 13 January, we published updated draft guidance for comment. Following the period for comment, we are today publishing finalised guidance, which follows the overall approach of the draft guidance.

For mortgages, we are extending the guidance so that firms should not enforce repossessions, except in exceptional circumstances, before 1 April 2021. 

For consumer credit, we have updated the guidance so that firms will be able to repossess goods and vehicles from 31 January 2021. The final guidance emphasises that this should only be as a last resort, and subject to complying with relevant government public health guidelines and regulations, for example on social distancing and shielding. Importantly, firms will also need to consider the potential wider impact on vulnerable customers, including because of the pandemic, when deciding whether repossession of goods or vehicles is appropriate.

Our approach reflects the different risks and harms that customers with goods or vehicles on credit are likely to face compared to those who are at risk of losing their home at this time. 

Support available for consumers

Support continues to be available if you’re experiencing financial difficulties because of coronavirus. This could mean taking a payment holiday or receiving tailored support.

You have until 31 March 2021 to apply for a payment holiday for:

mortgages, personal loans, credit cards, store cards and catalogue credit, motor finance, including hire-purchase and leasing agreements, rent-to-own, buy now pay later, pawnbroking agreements and high-cost short-term credit.

This is time agreed with your lender when you make no or reduced payments. You can request a payment holiday of up to 6 months in total, but lenders can only agree a payment holiday of up to 3 months at a time. For high-cost short-term credit, you can apply for a 1 month payment holiday. If you apply by 31 March, you may be able to extend up to 31 July when all payment holidays will come to an end.

If you’ve taken a payment holiday your lender will be in touch before it ends to see if you need more help. If you can afford to restart repayments you should, as it will cost less in the long term.

If you are coming to the end of your payment holiday, and you are still experiencing difficulties in keeping up with your repayments, your lender should provide tailored support. This is support appropriate to your individual circumstances.  

Keeping pace with contactless payments

Since the limit for contactless card payments was raised to £45 last April at the start of the pandemic, people are increasingly making use of contactless payments. It’s important that payments regulation keeps pace with consumer and merchant expectations. Recognising changing behaviour in how people pay, as part of a wider consultation, we will shortly be seeking views on amending our rules to allow for a possible increase in the contactless limit to £100.

Support for frontline staff

Banks, building societies, credit unions and Post Offices are working hard to continue to provide their services during the current period of national restrictions due to coronavirus (Covid-19). At this time, we encourage customers, wherever possible, to use online services for their banking.

We are aware of reports of an increase in verbal and physical attacks on branch staff by customers who have been told to wear a face covering or asked to wait in a queue to help maintain social distancing. This is a matter of concern for the FCA and we wish to thank the frontline staff for their significant efforts to keep branches open during this challenging period.

We would remind customers that, by law, it is mandatory to wear a face covering in a branch, unless you have an exemption. For more information on this please refer to the government guidance for England, Wales, Scotland, and Northern Ireland.

Branch staff are carrying out a critical public-facing service and must be treated with respect. Staff should not be physically or verbally attacked in any situation, including where a customer has been asked to wear a face covering.

We support firms that adopt a zero-tolerance approach to staff abuse and any necessary follow-up actions to enforce this. 

We recognise that coronavirus has made many people anxious about their finances. We are working closely with firms to make sure customers can access the financial services and help they need during the pandemic. For more information on the FCA’s temporary measures to support consumers, please see our coronavirus page.

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