Britain offers freeze on auto finance repayments in pandemic

(C) Reuters. FILE PHOTO: Cars are displayed outside a showroom in west London

LONDON (Reuters) – Britain’s financial watchdog has proposed a repayment freeze for consumers with auto finance leases, goods bought on high-cost credit, and pawned belongings during the coronavirus pandemic.

The Financial Conduct Authority (FCA) said on Friday it expects car leasing firms to provide a three-month payment freeze to customers who are having temporary difficulties meeting payments due to the coronavirus.

“If customers are experiencing temporary financial difficulties due to coronavirus, firms should not take steps to end the agreement or repossess the vehicle,” the FCA said in a statement.

Payday lending firms that offer short-term loans at a high interest rate, are expected to provide a one month interest-free payment freeze.

“This shorter period reflects both the much shorter length of most loans and, given interest rates tend to be higher than for other high cost credit products, prevents firms from accruing additional interest during the freeze period,” the FCA said.

Companies that offer rent-to-own, buy-now-pay-later, or pawnbroking agreements are expected to provide a three-month payment freeze to customers facing payment difficulties due to coronavirus, the FCA said.

“For most of these proposals, firms and consumers should consider the amount of interest which may build up, and balance this against the need for immediate temporary support,” said Christopher Woolard, FCA interim chief executive.