FCA confirms support for Coronavirus-hit customers

Following a short consultation, the Financial Conduct Authority (FCA) will be going ahead with the proposals outlined last week, giving firms the flexibility under its rules 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; and
• ensure consumers using any of these temporary payment freeze measures will not have their credit file affected.

The rule changes will be in force from today and the full range of measures will apply by 14 April, allowing firms time to ensure they have the appropriate level of resources available to handle customer requests, although some - including the major banks and building societies - will be adopting the changes today.

The FCA urged consumers to check websites or social media posts for more information, and where possible use online services to request assistance, in order to reduce the pressure on call centres which are experiencing high demand.

In response to the consultation, the guidance now also includes clarification on which products are in scope. In particular, the FCA confirmed that the following products are covered: guarantor loans, logbook loans, home collected credit, a loan issued by 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.

The regulator noted that these measures do not replace normal forbearance rules where these would be more suitable for a consumer in serious and immediate financial difficulty.

Christopher Woolard, interim chief executive at the FCA, said: “Customers should think carefully before making use of these measures and only do so if they need immediate help - where they can still afford to make payments, they should continue to do so.

“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.”

Eric Leenders, managing director of personal finance at industry body UK Finance, said: “Lenders stand ready at this most difficult of times to support customers and help the country get through this crisis and welcome today’s package of measures from the FCA to help deliver this."

Separately, the Treasury and the Bank of England have agreed to extend the use of the government’s long-established Ways and Means facility. As a temporary measure, this will provide a short-term source of additional liquidity to the government if needed to smooth its cashflows and support the orderly functioning of markets, through the period of disruption from COVID-19.

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