Just 10% of car loan defaulters that Ascent dealt with in the first three quarters of 2015 had their car repossessed, the recoveries law firm has claimed.

Instead, the majority (62%) came to a financial arrangement to bring their arrears up to date within an acceptable time frame. In 25% of case the arrears were paid in full, while 3% of consumers paid off the entire loan.

The firm said this was the result of the motor finance sector shifting the focus from repossession to rehabilitation.

David Whittaker, chief operating officer from Ascent said: “The landscape of the motor finance market is changing. Driven by the FCA’s ‘Treat Customers Fairly’ principles, we have seen a shift away from the short and sharp collection and recovery practices of the past. With change comes an opportunity to consider what options and measures are appropriate to manage a variety of ever present challenges, arrears management being one.

“Repossession and shortfall collection activities are still necessary tools of the trade. However, they are now being complemented or replaced by extended periods of forbearance and customer rehabilitation visits.

“Reconnect and rehabilitation visits now play an extremely important role within today’s collections and customer outcomes environment. The focus being the assessment of a customer’s current financial situation where important factors as vulnerability and affordability can be discussed and captured.”