Repossessions should only be enforced in exceptional circumstances, the regulator said.

The guidance on suspending repossession activity had been due to end on 31 January but following the government’s decision to extend lockdown restrictions and continue the furlough scheme, the regulator has changed its rules.

Consumer credit firms, however, will be able to repossess goods and vehicles from 31 January. The regulator said this reflected the different risks and harms that consumers would face if they lost items on credit compared to a family losing their home.

However, seizing items on credit should only take place as a last resort, according to the latest guidance, and firms should consider the impact their actions will have on vulnerable customers.

Payment deferrals and credit reports

Borrowers have until 31 March to apply for a payment deferral for mortgages, personal loans, credit cards and other types of consumer credit agreements. A break of up to six months in total can be granted.

If the lender and borrower put in place an agreement to repay deferred payments at the end of the payment break, the FCA said it would not expect this arrangement to be reflected on the borrower’s credit file.

If the borrower is not able to agree a payment plan immediately after the payment break has ended because their lender is experiencing operational difficulties and a missed payment is recorded on their credit file, lenders are expected to work with credit referencing agencies to make sure this reversed.

This is expected to only apply to one monthly payment.