As you would expect, our association has been contacted by those who are wondering what steps lenders will take to help those in financial difficulty during this Covid-19 pandemic.
The short answer is that lenders have a set of options they use when offering forbearance. At its simplest, it is not unusual for individuals to find themselves in financial difficulty throughout the year, and lenders will look for ways to help.
Of course, we cannot ignore the extraordinary situation in which we find ourselves. That will have an impact on firms as they move to handle the scale of this problem. There will be knock-on impacts, so therefore we would be grateful for understanding during this unprecedented period of disruption.
There are also some technical issues that we know have been raised by other trade associations. We operate under the Consumer Credit Act, requiring lenders to carry out specific actions that are not always helpful in this situation.
For example, lenders may enter into discussions with individual customers and offer forbearance. However, once the borrower has missed a payment, then they will receive an official Notice of Sum In Arrears. This process will be time-consuming and is a recipe for confusion. There are many other questions around how we modify legal agreements and what we should report to credit reference agencies.
What we can say is the CFA firms are busy considering all the issues and ensuring that they have the options to offer customers. They are seeking to play their part in these extraordinary times.