FCA Confirms Repossession Rules Affecting Borrowers, Moots £100 Contactless Limit – Forbes Advisor UK

Mortgage lenders will not be able to enforce property repossessions before 1 April 2021 (except in exceptional circumstances) under guidance issued by the Financial Conduct Authority, the UK’s financial services regulator.

For consumer credit customers (this includes credit cards, personal loans, car finance and other short-term credit plans), firms will be able to repossess goods and vehicles from 31 January 2021.

Further information on the situation for mortgage borrowers can be found here, and for consumer credit customers, it can be found here. The new guidance takes effect from 29 January, replacing the current regime.

Also check out Laura Howard’s comprehensive round-up of the help available to households hit financially by Covid-19.

£100 contactless limit?

The FCA is also to consult on whether to raise the limit on contactless payments by card and device from its current level of £45 to £100 per transaction.

It said: “Since the limit for contactless card payments was raised to £45 last April at the start of the pandemic, people are increasingly making use of contactless payments.

“It’s important that payments regulation keeps pace with consumer and merchant expectations. Recognising changing behaviour in how people pay, as part of a wider consultation, we will shortly be seeking views on amending our rules to allow for a possible increase in the contactless limit to £100.”

Range of options

Those experiencing financial difficulties because of coronavirus have a number of option, including taking a payment holiday.

Borrowers have until 31 March 2021 to apply for a payment holiday for:

• mortgages
• personal loans
• credit cards, store cards and catalogue credit
• motor finance, including hire-purchase and leasing agreements
• rent-to-own, buy now pay later, pawnbroking agreements and high-cost short-term credit.

A payment holiday is time agreed with a lender when the borrower makes no or reduced payments.

Borrowers request a payment holiday of up to six months in total, but lenders can only agree a payment holiday of up to three months at a time.

The exception is for high-cost short-term credit, where the customer can apply for a one-month payment holiday.

All payment holidays are scheduled to come to an end by 31 July.

Anyone who has taken a payment holiday will be contacted by their lender before it ends to see if more help is required – this would be in the form of more tailored assistance and support.

The FCA says that anyone who can afford to restart repayments should do so, as it will cost less in the long term.