Ban on home repossessions to be extended to April under regulator proposals

A home repossessions ban will be extended to April under proposals by the City regulator.

But consumer credit firms may be able to repossess goods and vehicles from January 31.

The new proposals affecting mortgage and consumer credit borrowers facing repossessions have been set out by the Financial Conduct Authority (FCA), which is inviting comments by 10am on January 18.

The FCA said its draft guidance reflects the different risks and harms that customers with goods or vehicles on credit are likely to face compared with those who are at risk of losing their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

Current guidance on mortgage repossessions means firms should not enforce repossessions before January 31 except in exceptional circumstances, such as a customer requesting that proceedings continue.

The FCA is proposing to extend this guidance so firms should not enforce repossessions before April 1.

It said the approach takes account of the worsening coronavirus situation and tighter virus-related restrictions which mean that consumers could experience significant harm if forced to move home at this time as a result of repossession proceedings.

Under current consumer credit guidance, before January 31, firms should not terminate a regulated agreement or repossess goods or vehicles under the agreement that the customer needs, except in exceptional circumstances.

But the FCA proposes changing this guidance so consumer credit firms will be able to repossess goods and vehicles from January 31.

The regulator said this should only be done as a last resort, subject to complying with relevant Government public health guidelines and regulations, for example on social distancing and shielding.

It added that firms 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.

Continuing to restrict repossessions for consumer credit customers may not be in their best interests as higher borrowing interest rates and the falling value of goods or vehicles could mean customers would end up owing more in the longer term, the regulator said.

UK Finance and the Building Societies Association said they will respond in support of the FCA’s draft guidance.

Eric Leenders, managing director of personal finance at UK Finance, said: “The banking and finance industry is committed to providing ongoing support to those facing financial difficulty as a result of the pandemic.”

Paul Broadhead, head of mortgage and housing policy at the Building Societies Association, said: “Mortgage lenders recognise the unique circumstances which are affecting some borrowers during the pandemic.”