You can repossess cars but not homes during Covid, watchdog tells UK banks
British banks should avoid repossessing homes of mortgage customers for another three months but may repossess cars after the reimposition of tough lockdown restrictions across the UK, the Financial Conduct Authority proposed on Wednesday.
The FCA's no forced repossession guidance, introduced after the first lockdown in March last year, had been due to expire at the end of January.
The aim of the guidance is to ease pressure on customers who are in difficulties due to a pandemic that tipped Britain into its worst recession in 300 years.
“We propose extending this guidance so that firms should not enforce repossessions before 1 April 2021,” the watchdog said in a statement.
A public consultation on the extension will end on January 18.
“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,” the FCA said.
The watchdog also issued guidance last year to credit firms, saying they should not terminate a contract or repossess goods or cars, except in exceptional circumstances.
“We now propose changing this so that consumer credit firms will be able to repossess goods and vehicles from 31 January 2021,” the FCA said.
“However, 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.”
Cars are sold by auto financing brokers as well as via bank loans.