The regulator said its draft guidance reflects the different risks and harms that customers with goods or vehicles on credit are likely to face compared with those who are at risk of losing their home.

It is inviting comments on its proposals by 10am on 18 January 2021.

Ban on mortgage repossessions

The regulator last announced support for mortgage borrowers experiencing payment difficulties as a result of coronavirus in November.

This guidance said that firms should generally not enforce repossessions before 31 January 2021, except in exceptional circumstances, such as a customer requesting that proceedings continue.

The FCA is proposing extending this guidance so that lenders shouldn’t enforce mortgage repossessions before 1 April 2021.

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The FCA says 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 regulator also noted that there are also government bans on evictions in some nations, which could also prevent firms from enforcing home repossessions.

End on repossession ban for vehicles and other assets

The FCA’s current guidance suggests that lenders shouldn’t terminate a regulated agreement or repossess goods or vehicles, except in exceptional circumstances, before 31 January 2021.

It is now proposing changing this so that consumer credit firms will be able to repossess goods and vehicles after 31 January 2021.

The FCA says repossession 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.

It says lenders will be expected to consider the impact on customers who may be vulnerable, including because of the pandemic, when deciding whether repossession of goods or vehicles is appropriate.

The FCA says that for customers who remain in payment difficulties under a relevant consumer credit agreement, continuing to restrict repossessions “may not be in their interests”.

This is because 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.