The Financial Conduct Authority (FCA) has confirmed a support package of targeted temporary measures to help people with some of the most commonly-used consumer credit products.
Following a short consultation the FCA will be going ahead with proposals which will give firms the flexibility to provide temporary financial relief to those facing payment difficulties during the coronavirus pandemic.
The measures include firms being expected to:
- offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by coronavirus.
- allow customers who are negatively impacted by coronavirus and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months.
- make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force.
- ensure consumers using any of these temporary payment freeze measures will not have their credit file affected.
In response to the consultation, the FCA has confirmed that the following products are covered: guarantor loans, logbook loans, home collected credit, a loan issued by a Community Development Finance Institution and some loans issued by credit unions, but only where these are regulated. The guidance also applies to firms which have acquired such loans.
It also confirmed there will be further announcements next week.
Christopher Woolard, interim chief executive at the FCA, said: “We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic.
“The measures we’ve announced are designed to provide people affected with short-term financial support through what could be a very difficult time.
“The changes will provide support for consumers with credit cards, loans and overdrafts, facing temporary financial difficulties because of the pandemic.
“We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week.”
The rule changes will be in force from today and the full range of measures will apply by Tuesday 14 April 2020. This is to allow firms time to ensure they have the appropriate level of resources available to handle customer requests.
All firms will be ready to receive customer requests by 14 April, although HSBC, Lloyds, RBS, Barclays, Santander and Nationwide will adopt the changes today.
These measures won’t replace normal forbearance rules where these would be more suitable for a consumer in serious and immediate financial difficulty. Consumers in financial difficulty should contact the Money Advice Service (MAS) for further guidance.
