Drivers struggling with car finance payments told to expect help this week - FCA

Thousands of drivers this week await an update on pressure-easing measures designed to help them meet car finance payments amid the coronavirus crisis.

Car finance customers struggling to keep up with payments due to drops in income were given hope by the Financial Conduct Authority (FCA), which hinted at an announcement “one day” this week.

The BBC understands a lifeline could come in the form of an interest-free payment freeze, as already unveiled for the likes of loan and credit card customers.

Christopher Woolard, interim chief executive of the FCA, told Car Dealer magazine that measures already put in place are designed to provide people with “short-term financial support through what could be a very difficult time”.

Mr Woolard suggested the car finance industry is among the next raft of FCA considerations.

“We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week,” he said.

So far, general measures announced by the FCA include a payment freeze of up to three months on loans and credit cards, and an overdraft of £500 with no interest for affected consumers.

It also pledged to ensure no overdraft customers are worse off compared with before new charges were introduced, and to make sure the credit history of anyone taking advantage of help is not affected.

Mr Woolard added: “We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic.

“The changes will provide support for consumers with credit cards, loans and overdrafts, facing temporary financial difficulties because of the pandemic.”

Car finance has been described as “the petrol in the engine of the economy” by the Finance & Leasing Association (FLA), as its director general Stephen Haddrill added his voice to those urging lenders to do all they can to support motorists.

Latest FLA data shows the new car finance market reported an 8% drop in year-on-year new business volumes in February (to 44,747), a month after the Society of Motor Manufacturers and Traders (SMMT) reported a 2.9% decline in registrations for the pre-number plate change period.

By value, the new car finance market declined by 4% to £910 million.