Firms to offer loan and credit freeze
The Financial Conduct Authority (FCA) has proposed temporary measures to support customers with credit products.
- Firms to offer an up to three month payment freeze on loans and credit cards where consumers face difficulties with their finances as a result of coronavirus. Alternatively, customers will be able to pay a nominal amount on credit cards, store cards and catalogue credit.
- Those hit financially by coronavirus who already have an arranged overdraft on their main personal current account, will be charged 0% on up to £500 for up to three months. Customers without an overdraft on their main personal current account are able to request this.
- Firms to ensure overdraft customers are no worse off on price than before recent overdraft changes came into force.
- Credit ratings protected so payments freeze won’t impact ratings.
Firms would be entitled to charge a reasonable rate of interest where a customer requests a temporary payment freeze. However, where a customer requires full forbearance that interest should be waived.
The regulator added the measures aren’t a substitute for the normal forbearance firms should show to those in serious and immediate financial difficulty.
But where consumers can still afford to make payments, they should do so as it’s likely to be in their best long-term interest.
The proposals are subject to a short consultation period but the FCA said if confirmed, the measures would come into force a week today on Thursday 9 April.
Christopher Woolard, interim chief executive of the FCA, said: “Coronavirus has caused an unprecedented financial shock with far-reaching consequences for consumers in every corner of the UK.
“If confirmed, this package of measures we are proposing today will help provide affected consumers with the temporary financial support they need to help them weather the storm during this challenging time.”