Taxi reps look to meet Finance and Leasing Association to discuss solution for struggling cab owners
Taxi representatives are looking to set up a meeting with the Finance and Leasing Association (FLA) to discuss how struggling taxi drivers can avoid repossession orders on their taxis whilst work levels remain low during lockdown.
The coronavirus pandemic has financially hit the taxi industry across the UK hard due to the measures closing leisure venues, work offices and non essential shops.
According to the Financial Conduct Authority (FCA), who recently met with the Licensed Taxi Drivers’ Association (LTDA), an extension to the six month taxi motor finance payment holidays looks unlikely. However the FCA will propose that consumer credit customers who have not yet had a payment deferral under the July guidance can request one. This could last for up to 6 months unless it is obviously not in the customer’s interests.
That news is not good for taxi drivers and other professionals who have already taken the full six month payment break and find their trade decimated by COVID-19 restrictions. Cabbies and other motorists who have already benefitted from payment deferrals and are still experiencing payment difficulties are being urged to speak to their lender to agree tailored support.
The LTDA has been collecting information from cab drivers based on their experiences with financial credit firms during the pandemic and will be using those to make a case for more support.
Steve McNamara, LTDA General Secretary, told members: “We have met with the FCA who were supportive, but as they do not actually regulate these kinds of agreements they have limited powers to help. They didn't think further payment holidays would be possible, but put us in touch with the Finance and Leasing Association that represents lenders like Black Horse.
“We are hoping to meet with them to find ways lenders could give struggling drivers a better deal and to avoid repossessions, which would mean that lenders and drivers both lose out, as there is no resale market for taxis at the moment.
“The FCA also said that our best bet was to lobby the government for more financial support to help drivers cover payments and so we are doing just that through Taxi Drivers Can't Work from Home.”
The FLA was however critical of the FCA’s intent to extend the payment deferral period for consumer credit customers to a maximum of six months. There are concerns that providing borrowers a six-month payment break could leave people “unsustainable debts that they may struggle to repay”.
Stephen Haddrill, Director General of the FLA, said: “Lenders are committed to supporting customers in financial difficulty and it is vital that this support is provided in a way that best serves their borrowers’ interests.
“This is best achieved under existing FCA rules that require lenders to assess their customer’s position carefully. Giving borrowers the impression that a six-month deferral is always the right answer is dangerous. It could leave people with unsustainable debts that they may struggle to repay.
“The FCA should limit its guidance on payment deferrals to three months at this stage as it did in March, so that there can be a full review of the policy by the FCA, and of individual circumstances by lenders before any extension. Without this, some people will continue deferring payments and accruing debt to their extreme detriment.
“If HM Treasury and FCA press ahead with a deferrals policy until the end of March 2021 in spite of these risks, then furlough should also be extended well beyond one month to give more people a realistic chance of being able to better manage their repayments in the interim.”