 FCA confirms further support for motor finance and high cost credit customers
The financial consequences of coronavirus (Covid-19) have been severe, and while for some people the hardship may be temporary, others face long-term impacts. We have worked quickly to respond, to set out and clarify our expectations of firms, and make sure consumers are protected. We are doing this with the constructive input of consumer groups, trade associations and firms. The latest of our interventions was announced on 15 July and applies to motor finance and high-cost credit products including buy-now pay-later, rent-to-own, pawnbroking and high-cost short term credit agreements.
These proposals set out that:
- at the end of a first payment deferral, firms should contact their customers to discuss if they can resume payments
- anyone who continues to need help should get help
- the scheme has been extended until 31 October 2020, so those impacted later can still apply and the ban on repossessions also remains in place
- customers who need further temporary support should not see a negative impact on their credit file
We continue to reiterate that:
- those able to make payments should do so as it’s in their best interest
- firms should be very aware of the needs of vulnerable customers
- our measures do not prevent firms from providing more favourable or appropriate forms of assistance
This publication is the last of the updates to our existing packages of temporary credit measures. However, we are thinking about what happens next, and we are engaging with stakeholders to shape this.
Launch of Enhanced Financial Services Register
On 27 July 2020 we are replacing the existing Financial Services Register with an enhanced Financial Services Register.
The enhanced Register will have a new look and include improvements we’ve made in response to user feedback. The changes make it easier to find and understand information on the Register. We will provide more details when it launches.
Firms will need to update any links they have to pages on the current Financial Services Register, other than those to the homepage, once the enhanced Register launches. We will redirect all current links to the enhanced Register’s homepage. The existing Financial Services Register will cease to be available from 6pm on Friday 24 July to enable us to make the enhanced Register ready for the start of business on Monday 27 July.
Under the Senior Managers and Certification Regime (SM&CR), we committed to publishing and maintaining a directory of certified and assessed persons on the Financial Services Register, so consumers and professionals can check details of key individuals working in financial services. We will add the Directory of Certified and Assessed Persons to the Register later this year.
Extension of the Senior Managers & Certification Regime (SM&CR) implementation periods for solo-regulated firms
The deadline for solo-regulated firms to have completed the first assessment of the fitness and propriety of their Certified Persons has been delayed from 9 December 2020 until 31 March 2021.
The Treasury has agreed to delay this deadline to give firms significantly affected by the coronavirus pandemic time to make the changes they need.
To ensure SM&CR deadlines remain consistent, and to give extra time for firms that need it, we intend to consult on extending the deadline for the following requirements from 9 December 2020 to 31 March 2021:
- the date the Conduct Rules come into force
- the deadline for submitting information about Directory Persons to the Register
- references in our rules to the deadline for assessing Certified Persons as fit and proper (which has been agreed by the Treasury)
Find out more about the extension.
Refunds for cancelled services during the coronavirus pandemic
During the pandemic a number of services have been cancelled, such as events, holiday accommodation or flights. Many people have been seeking refunds for those cancelled services and may have been offered vouchers instead.
We published statements on 29 June to help consumers understand their rights and set out our expectations of businesses, to ensure they continue to treat customers fairly. The statements cover claims under chargeback, section 75 and insurance. We will be consulting in the coming weeks on guidelines, so that in future our expectations of firms and the choices for consumers will be clearer.
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Electronic alternatives to cheques for firm-to-firm payments
Some firms continue to make payments to other regulated firms using cheques, particularly where clients are transferring to new platforms or investment management service providers.
We have received reports that this caused some difficulties during the Covid-19 disruption. Firms may want to be aware of this and consider transferring funds using secure electronic alternatives to cheques, where possible. This reduces the need for staff to be handling cheques onsite.
We do not expect firms to require all customers to stop using cheques. Electronic payment methods may not be appropriate for all customers, as set out in our previous website statement.
Business interruption (BI) court proceedings: Publication of Reply
We have served our Reply, which sets out its response to the Defences. Since 24 June we have received more than 90 detailed submissions from policyholders and other stakeholders on the Defences. We considered these when drafting the Reply. We also conducted numerous meetings with policyholders and other stakeholders as part of this process.
We have also published the:
Travel insurance claims
Insurers will understand that the coronavirus pandemic is a stressful time for many customers and we expect them to take this into account when dealing with claims. For example, some customers submitting a travel insurance claim might also have a right to claim the cost of cancelled travel arrangements from their credit card provider. Where this is the case, insurers should consider how best to handle the claim to ensure the customer is treated fairly and not raise unreasonable barriers to making a claim. More information on avenues for consumer redress is available on our website. We have also published information for consumers on claiming a refund.
Updated guidance on MOT's
The Department for Transport (DfT) has updated its website. The update states that MOT expiry dates for cars, vans or motorcycles will be extended by 6 months if the MOT was due between 30 March 2020 and 31 July 2020. An MOT certificate will not be extended if a vehicle’s MOT expires on or after 1 August 2020. An MOT must be booked as usual.
We expect insurers to continue to provide cover for consumers’ car, motorcycle or van insurance due to their temporary situation, in line with DfT policy. This includes at renewal.
Extension of the Senior Managers & Certification Regime (SM&CR) implementation periods for solo-regulated firms
The deadline for solo-regulated firms to have undertaken the first assessment of the fitness and propriety of their Certified Persons has been delayed from 9 December 2020 until 31 March 2021. This will give firms significantly affected by the coronavirus pandemic time to make the changes they need. More information is available on our website.
EIOPA Guidelines on outsourcing to cloud service providers
On 6 February 2020, the European Insurance and Occupational Pensions Authority (EIOPA) published final Guidelines on outsourcing to cloud service providers for insurance and reinsurance undertakings ('the Guidelines').
The FCA has notified EIOPA that the Guidelines are not applicable to regulated activities within the UK’s jurisdiction, as they will enter into force on 1 January 2021, after the EU withdrawal transition period is expected to end.
We will continue to apply our FG16/5 Guidance for firms outsourcing to the cloud and other third-party IT services in the UK, first published in 2016 and last updated in September 2019. We will keep this guidance under review and, where appropriate, consult to update this to ensure it remains consistent with relevant international standards.
Electronic alternatives to cheques for firm-to-firm payments
Some firms continue to make payments to other regulated firms using cheques, particularly where clients are transferring to new platforms or investment management service providers.
We have received reports that this caused some difficulties during the Covid-19 disruption. Firms may want to be aware of this and consider transferring funds using secure electronic alternatives to cheques, where possible. This reduces the need for staff to be handling cheques onsite.
We do not expect firms to require all customers to stop using cheques. Electronic payment methods may not be appropriate for all customers, as set out in our previous website statement.
Electronic alternatives to cheques for firm-to-firm payments
Some firms continue to make payments to other regulated firms using cheques, particularly where clients are transferring to new platforms or investment management service providers.
We have received reports that this caused some difficulties during the Covid-19 disruption. Firms may want to be aware of this and consider transferring funds using secure electronic alternatives to cheques, where possible. This reduces the need for staff to be handling cheques onsite.
We do not expect firms to require all customers to stop using cheques. Electronic payment methods may not be appropriate for all customers, as set out in our previous website statement.
Further support for consumer credit customers
We’ve confirmed the support users of certain consumer credit products can request if they are still experiencing temporary payment difficulties due to coronavirus.
The measures outline the further support firms will provide credit card and other revolving credit (store card and catalogue credit) and personal loan customers who are coming to the end of their initial payment freeze, or those who are coming to the end of their £500 interest-free overdraft, and require more help. The guidance also confirms that those people who have not yet requested a payment deferral, or support with their overdraft will have until 31 October 2020 to apply.
Update on banks’ overdraft pricing decisions
In June 2019, we published new rules designed to make firms’ overdraft prices transparent and easy to compare to other products. In January 2020, we wrote to firms to ask them to explain how they reached their new overdraft rates. We have published a statement confirming that, having reviewed this evidence, we do not intend to open a formal investigation at this stage. We also set out next steps, including a post-implementation evaluation of our overall package of overdraft remedies.
We will be keeping a close watch on how prices develop, particularly during and after the coronavirus pandemic.
Rent-to-own – review of price cap
We are reviewing the effectiveness of the rent-to-own price cap in protecting consumers. We committed to this when confirming that the price cap would come into force in March 2019. Our review focuses on:
- how the price cap has affected product prices and the total costs charged for products sold by rent-to-own firms
- the effectiveness of the rule limiting firms’ ability to increase other charges to recover lost revenue.
We aim to complete and report on the review towards the end of this year.
Additional guidance for payment services and e-money firms
On 9 July, we published additional guidance to strengthen payment services and e-money firms’ prudential risk management and safeguarding arrangements.
The guidance is part of a broader programme of work that we were due to consult on later in the year, and has been brought forward due to the coronavirus pandemic. We still intend to consult more broadly on our expectations for the payments sector later in 2020/21.
We will act swiftly where firms fail to meet safeguarding and other regulatory requirements. Firms should read the guidance and take any appropriate action.
Payments and e-money firms portfolio strategy letter
As part of our approach to supervision we have written to payments and e-money firms. The letter sets out the actions we expect firms to take to prevent harm to customers by ensuring compliance with regulatory obligations across 6 key areas: Safeguarding, Prudential risk management, Financial Crime, Financial promotions and consumer communications, Governance and oversight and Records management and reporting.
Firms should consider and discuss these key areas and agree what further action you should take to ensure you meet the requirements.
Brexit
The UK left the EU on 31 January 2020 and entered a transition period which is due to end on 31 December 2020. We have published more information for firms. Find out what this means for firms and consumers on our Brexit pages.
Preparing for the end of the transition period
We have published updated information about preparing for all scenarios at the end of the transition period for firms and consumers. Find out more:
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