Unbolted warns FCA pawnbroking proposals would harm its retail investors
The City regulator’s proposed three-month payment holiday for pawnbroking borrowers would likely be detrimental to Unbolted’s retail investors, its co-founder Rito Haldar has claimed.
The Financial Conduct Authority (FCA) recommended this payment freeze for borrowers of pawnbroking agreements, facing difficulties due to Covid-19.
Haldar said that in its normal course of business, Unbolted applies forbearance to all borrowers who genuinely intend to renew or redeem their loan contracts but are faced with temporary financial difficulties.
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“We find this to be in the interest of our lenders as well,” he said.
“We have already expanded on this policy in response to Covid-19.
“However, we do not think that the proposed three-month deferral on all P2P consumer pawnbroking agreements is a desirable outcome.
“It is likely to be detrimental to the interest of retail lenders and we are seeking clarification from the FCA on how to balance the interests of lenders and borrowers.”
The regulator also suggested pawnbrokers should extend the redemption period for the three-month freeze period or, if the redemption period has already ended, agree not to serve notice to sell an item that has been pawned for that period.
The City watchdog said if the firm has already informed the consumer that they intend to sell the item, they should suspend the sale during the payment freeze.
The payment freeze proposals also cover high-cost short-term credit, rent-to-own and buy-to-now pay-later.
“We are very aware of the continued struggle people are facing as a result of the pandemic,” said Christopher Woolard, interim chief executive at the FCA.
“These measures build on the interventions we announced last week, and will provide much needed relief to consumers during these difficult times.”
This follows the FCA freezing regulatory fees for firms it regulates and going ahead with new rules requiring personal loan providers to offer temporary payment freezes to borrowers affected by the pandemic.
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