Money Advice Trust > Media centre > News > FCA action for motor finance and high cost credit customers welcome, but ‘questions remain’

FCA action for motor finance and high cost credit customers welcome, but ‘questions remain’

17th April 2020​


The Money Advice Trust, the charity that runs National Debtline and Business Debtline, has welcomed the Financial Conduct Authority’s new package of measures to support motor finance and high cost credit customers financially impacted by the Coronavirus outbreak.


The charity has broadly welcomed the FCA’s proposals​ on motor finance and other credit products including ‘rent-to-own’ and ‘buy now pay later’ schemes but has questioned why the proposed payment freeze for high-cost short-term credit, including payday loans, is only for one month. 

The proposals follow action from the regulator to support credit card, loan and overdraft customers confirmed last week.

Jane Tully, director of external affairs and partnerships at the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:

“The FCA’s proposed new measures on car finance, rent-to-own and ‘buy now pay later’ schemes are welcome and provide a more comprehensive package of support for consumer credit customers.  Payment freezes are crucial to allow some short-term breathing room for people whose incomes have been hit hard by the Coronavirus outbreak, and we are pleased that they will now apply to a wider range of borrowing.

“However, the proposed one-month freeze on high cost credit, including payday loans, is unlikely to be long enough for someone trying to deal with their immediate situation.

“More broadly, there remains the problem of interest being accrued on credit cards, personal loans and other borrowing during payment deferrals – potentially storing up problems further down the line when customers are required to resume payments but for higher balances.

“It is also crucial for the regulator to consider business lending products for microbusiness customers – and to look ahead as to what happens beyond the end of these temporary measures. The steps announced this month will help now but the financial challenges people are facing will not disappear after three months and are likely to last far longer.” 

National Debtline has published a Coronavirus factsheet for people whose finances have been impacted by Covid-19, available at www.nationaldebtline.org/coronavirus ​ 

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