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Credit and loan customers to receive further payment holidays

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
02/11/2020

The financial watchdog proposes to extend payment deferrals for credit and loan customers for a further six months.

The Financial Conduct Authority (FCA) said it is to propose updates on its temporary guidance offering support to personal loan, credit card, motor finance, rent-to-own, buy-now pay-later, pawnbroking and high-cost short-term credit customers who continue to be financially impacted by coronavirus.

Following the government announcement of a second lockdown for England, the FCA proposed that for those who have yet to request a payment deferral under its July guidance, they will be able to request one.

This could last for up to six months unless it’s “obviously not in the customer’s interests”, it said.

For those who are already on a payment deferral, they would be able to apply for a second holiday.

Consumer credit customers who have already benefitted from payment deferrals and are still experiencing payment difficulties should speak to their lender to agree tailored support.

For high-cost short-term credit (such as payday loans), customers would be able to apply for a payment deferral of one month if they haven’t already had one.

However, the FCA warned that for credit customers who could afford to make repayments, they should continue to do so.

It added it will work with trade bodies and lenders to implement the proposals as quickly as possible and will make another announcement in due course.

In the meantime, consumer credit customers should not contact their lender just yet. Lenders will provide information soon on what this means for their customers and how to apply for this support if the FCA proposals are confirmed.

Mortgage payment holiday

Rules allowing borrowers in financial distress because of the coronavirus crisis to take a mortgage payment holiday will be extended for a further six months, the FCA also announced.

This means borrowers who have not yet taken a payment holiday but find themselves needing to do so, will be able to for up to six months.

And those who have taken one three-month holiday will be able to take a further one.

However, borrowers who have already used a full six-month payment holiday must seek support from their lender.

Customers are being urged not to contact their lenders yet.

The regulator will be publishing a consultation on the updated guidance today which will clarify the details further.