FCA to extend repossession ban until April

The FCA has announced proposals to extend its ban on repossessions until 1 April 2021.

Current guidance on mortgage repossessions means firms should not enforce repossessions before 31 January 2021 except in exceptional circumstances, such as a customer requesting that proceedings continue.

An FCA statement read: “This approach takes account of the worsening coronavirus situation and the government’s tighter coronavirus-related restrictions which mean that consumers could experience significant harm if forced to move home at this time as a result of repossession proceedings.

“We recognise that there are also government bans on evictions in some nations, which could also prevent firms from enforcing home repossessions.”

The FCA also announced new plans for its consumer credit guidance, which currently means that before 31 January 2021 firms should not terminate a regulated agreement or repossess goods or vehicles under the agreement that the customer needs.

The regulator has proposed changing this so that consumer credit firms will be able to repossess goods and vehicles from 31 January 2021, but suggested this should only be as a last resort and subject to complying with government public health guidelines.

The FCA said: “Our proposed 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. For customers who remain in payment difficulties under a relevant consumer credit agreement, continuing to restrict repossessions may not be in their interests.

“The shorter terms and higher interest rates on these agreements, combined with the depreciating value of the goods or vehicles, means that they could end up owing more in the long term if repossessions are prevented.

“Our approach, therefore, takes appropriate account of the risks to customers of further asset depreciation, whilst providing appropriate protections by ensuring that firms repossess only as a last resort and also consider the impact of repossession action on those who are vulnerable.”

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