But rules on repossessions could still be updated or changed if the FCA makes alterations during the consultation process.
A ban on repossessions was initially put into place for 31 October 2020 but this was later extended as the effects of the pandemic continued.
However, the FCA said that restricting repossessions for those struggling with payments would not be in the interests of the driver.
They warn drivers stuck in existing policies could end up owing more in the long run due to high-interest rates.
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The FCA said their approach still offers “appropriate protections” as firms would only repossess cars as a “last resort”.
Click the thumbs up >The Finance and Leasing Association (FLA) has welcomed changes to Financial Conduct Authority (FCA) legislation which will allow motor finance firms to resume car repossessions from motorists who miss regular repayments.
The FCA announced yesterday (January 13) that car finance providers and other lenders, who had been banned from making repossessions during the COVID-19 coronavirus crisis, can resume seizures of vehicles and goods for non-payment from January 31.
Commenting on the Financial Conduct Authority’s proposed update to the guidance on repossessing vehicles, Adrian Dally, head of motor Finance at the FLA, said: “This is a welcome move as it allows lenders and consumers to decide together on the best outcome.