Calls for urgent clarity on financial help for bank customers
Banks have been rolling out plans to help customers cope with the economic impact of the crisis, with the terms of these measures varying between brands.
The Financial Conduct Authority is expected to introduce a package of new measures on Thursday, to provide a temporary solution for consumers who until now have been financially stable.
These include a temporary payment freeze on loans and credit cards as well as zero interest on existing overdrafts up to £500, with both put in place for three months.
The consumer group says “reassurance is needed that the measures can be consistently applied for customers across all banks”, and that customers who take up these options will be “fully aware of any longer term implications of using them”.
For example, it is calling for the FCA to be as explicit as possible about precisely when a payment holiday period starts – whether it is from the proposed launch date of 9 April, or from the moment the consumer requests support at any point during those three months.
It also says there needs to be a clear, industry-wide exit strategy for the temporary measures, which must ensure that customers do not end up in unnecessary financial hardship.
It is particularly concerned about how customers will be moved off of their £500 interest free overdrafts after three months.
Which? says it is vital banks do not immediately place consumers back to their original arranged overdraft and rates at the end of any holiday period, and the FCA should consider “easing off” interest-free overdraft arrangements in a way that does not affect credit scores.
It comes as new research reveals the huge toll the outbreak is expected to take on people’s finances.
A survey by Which? carried out between 20-22 March, just before the nationwide lockdown was put in place, highlights that significant numbers of people are expecting to struggle with their finances over the next year.
Taking the proportion of people expecting their financial situation to get better and subtracting the proportion who expects it to get worse, confidence among part-time workers was at -56 percentage points and -36 for those in full time work.
Gareth Shaw, head of money at Which?, said: “The impact of the coronavirus outbreak is going to cause a sharp shock to huge numbers of people across the country, and many who were previously in good financial health will now require help from their banks to see them through the coming months.
“While the FCA has taken positive steps to provide assistance, there needs to be urgent clarity so that banks can apply this support consistently for everybody who is eligible, and customers can decide whether these measures represent the best option available to them.”