Themis Consultancy

Members Only | 21/07/21

As we all patiently navigate the four steps of the roadmap out of lockdown, users (and providers) of personal loans, credit cards, store cards, catalogue credit, rent to own, buy now pay later, pawnbroking, motor finance and high-cost short-term credit (HCSTC), will also be on their own, often personal, journeys on the road to recovery.

The Financial Conduct Authority’s (FCA) Finalised Guidance on consumer credit products which came into force on 25 November 2020, pre-empted the government’s roadmap, setting out a consumer finance roadmap, which at a high-level can be summarised as follows:

Step 1 – Consumers had until 31 March 2021 to apply for an initial or further payment deferral. Eligible customers were able, where it was in their interests, to defer up to six monthly payments, provided that the last deferral relates to payments falling due no later than July 2021. Under the HCSTC guidance, customers who had not yet benefitted from support under that guidance could be granted a one-month payment deferral before the end of 31 March 2021. The HCSTC guidance expired on 31 March 2021, albeit certain provisions remain in force beyond that guidance for customers who have a payment deferral but who have not been dealt with under the relevant parts of the guidance by that date.

Step 2 – After 31 March 2021, consumers are able to extend existing deferrals to 31 July 2021, provided those extensions cover consecutive payments (subject to the maximum six months allowed). Firms should take reasonable steps to contact their customers in good time before the end of a payment deferral period with information about resuming payments and on how to access further support.

Step 3 – On 31 July 2021 the Payment Deferral Guidance (PDG), as it applies to all firms (other than the HCSTC – see Step 1 above), expires but certain provisions of it, including the interest waiver remain in force beyond that date to enable firms to deal with customers at the end of payment deferrals that end shortly before that date.

Step 4 – After 31 July 2021 firms will rely more heavily on the Tailored Support Guidance where customers are facing payment difficulties due to circumstances arising out of coronavirus (but are not eligible for payment deferrals under the then expired PDG). Despite the expiration of the PDG on 31 July 2021, firms can continue to support consumers by offering payments deferrals, however payment deferrals provided in these circumstances should be reported to credit files in accordance with usual reporting processes and the FCA expects firms to ensure that balances do not escalate where further payment deferrals are provided outside of the PDG.

The above summary does not cover every detail contained within the reems of guidance produced, so how can firms satisfy themselves (and the regulator) that they have done the right thing by their consumers? Well, I am pleased to say that amongst all of the detail, the FCA has set out, very clearly, the outcomes it expects firms to deliver and evidence.

Firms must be able to show:

• they have had due regard to the interests of their customers and treated them fairly

• they have treated customers with forbearance and due consideration

• customers have been given sustainable arrangements, taking into account their other debts and essential living costs, which give them reasonable time and opportunity to repay their debt

• customers have not been pressurised into repaying their debt within an unreasonably short period of time

• customers have been and are being protected from escalating debt once they have entered into a forbearance arrangement.