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Leasing companies are expected to follow guidelines by the Financial Conduct Authority (FCA) and offer support to business customers facing cash flow problems as a result of Covid-19.
In a recent announcement, the regulator said it expects firms to provide a three-month payment freeze to customers who are having temporary difficulties meeting finance or leasing payments due to the coronavirus.
It also said if customers are experiencing temporary financial difficulties due to the coronavirus, companies financing the vehicles should not take steps to end the agreement or repossess them.
Richard Jones, managing director of motor finance and leasing at Lloyds Banking Group, said: "We welcome the guidance from the FCA on the support that should be offered to motor finance customers who have been impacted by Covid-19.
"Since the start of the pandemic, we have already helped more than 50,000 personal customers using the temporary support measures we have introduced.
"Customers can apply to defer their payments for up to three months on PCP, hire purchase and contract hire agreements by using our new online service, which enables most customers to action their request instantly. There are no missed payment fees and a customer's credit rating will not be adversely impacted.
"There are also a range of options in place to help businesses and we have already granted payment holidays to more than 3,000 of our fleet customers. Those with up to 20 vehicles on fleet can apply to defer their payments online, and those with fleets of more than 20 vehicles should contact their account manager directly to discuss the support that is
on offer."
In actions aimed more at retail customers, the FCA has also proposed that contract hire companies should not change customer contracts in a way that is unfair, such as trying to use temporary depreciation of car prices caused by the coronavirus situation to recalculate personal contract purchase (PCP) balloon payments at the end of the term.
"We will expect firms to act fairly where terms are adjusted," the FCA said.
However, the vehicle leasing and rental industry is keen to see vehicle movements begin again, as soon as they are able, to help "unclog the vehicle supply chain".
The BVRLA has produced best practice advice on this in collaboration with the SMMT and the Finance & Leasing Association (FLA), and hopes that vehicle deliveries, in particular, will start to pick-up.
"The government has made it very clear that it wants 'all supply chains' to continue 'to the greatest extent possible' during the Covid-19 outbreak," said BVRLA chief executive Gerry Keaney.
"This includes vehicle logistics, and not just cars and vans that are being delivered to essential workers. By getting these vehicles moving, we are not only helping the Covid-19 response, we are also ensuring that businesses and individuals can pick up where they left off as soon as the lockdown ends.
"We hope that the guidance we have produced with the SMMT and FLA can give our members and their supply chain partners the confidence to start making this happen."
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