Tag: COVID-19

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FCA consults on draft updated temporary guidance to credit card, overdraft and personal loan consumer credit firms dealing with customers needing COVID-19 related payment holidays

Earlier today, on 19 June 2020, the UK Financial Conduct Authority issued a consultation on draft updated temporary guidance to credit card, overdraft and personal loan consumer credit firms dealing with customers needing COVID-19 related payment holidays.

There’s draft guidance for credit cards (including retail revolving credit), for overdrafts and for personal loans. There’s also a draft handbook instrument.

My one page summary is (and you can see a bigger version if you click on it):

If you want a pdf copy, please get in touch: russell.kelsall@TLTsolicitors.com.

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FCA publishes updated finalised guidance for mortgages

On 4 June 2020 the UK Financial Conduct Authority published further guidance for customers who are unable to make their mortgage payments because of the impact of COVID-19.

However, and on 16 June 2020, the FCA revised this guidance. These changes say:

– firms should try and give as close to personalised information as possible (following lobbying from the industry that there are likely to be practical problems with providing personalised information);

– there are some changes to the guidance for (a) customers who have not yet had a payment deferral (to suggest a representative example relevant to the customer’s circumstances could be provided instead), (b) customers unable to resume full payments (with a similar suggestion of a representative example) and (c) the interactions with MCOB (particularly on variations and MCOB 7.6.28R and MCOB 7.6.28AR).

The guidance is set to expire on 31 October 2020 but the FCA may review and update before then.

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Voluntary terminations for regulated hire purchase and conditional sale agreements – does a customer have to take care of the vehicle whilst collection arrangements are being made?

The current COVID-19 restrictions mean asset and motor finance lenders are unable to collect vehicles as quickly as they’d like when a customer voluntary terminates a hire purchase or conditional sale agreement under Section 99(1) of the Consumer Credit Act 1974. Can you ask your customer to carry on taking care of the vehicle whilst you make arrangements to collect it?

After an agreement has been voluntarily terminated, the customer is likely to be a gratuitous bailee of the vehicle.  This type of bailment is known as a ‘deposit’ because the customer keeps possession of the vehicle without payment.

It’s likely there is two possible types of bailments: (a) involuntary deposit or (b) necessary deposit.

Involuntary deposit – this is where the vehicle is left with the customer against her wishes. In most cases, the customer will need to take reasonable care of the vehicle. But the customer will normally need to make good any damage caused deliberately but not negligently.

Necessary deposit – this is where the vehicle is left with a customer because of a peculiar stress or set of circumstances such as an unforeseen disaster (which the Covid-19 pandemic and lockdown arguably could fall into). The customer is likely to be responsible in negligence or bad faith whilst she has the vehicle.

So how do you protect your position and the vehicle? Talk to your customer. Ask if they’re willing to hold on to the vehicle whilst you make your collection arrangements. And talk to them about insurance, and who is going to pay for it.