Coronavirus: UK watchdog unveils proposals to help consumers defer credit card and loan repayments

Saleha Riaz
·2-min read
In September, the FCA announced tailored support for borrowers affected by the virus, and said it would keep the matter under review as the pandemic evolved. Photo: Getty
In September, the FCA announced tailored support for borrowers affected by the virus, and said it would keep the matter under review as the pandemic evolved. Photo: Getty

The UK’s Financial Conduct Authority (FCA) wants to extend payment deferrals and other support to consumer credit borrowers, including those who have taken out personal loans and owe credit card bills, in a bid to help those struggling due to the coronavirus pandemic.

The news comes as England enters a second lockdown from 5 November to 2 December.

In September, the FCA announced tailored support for borrowers affected by the virus, and said it would keep the matter under review as the pandemic evolved.

As a result of increasing restrictions, the regulator is now proposing to enhance these measures.

Under the new proposal:

  • Those who have not yet had a payment deferral will be eligible for two payment deferrals of up to six months in total.

  • Those who currently have an initial payment deferral, will be eligible for a further payment deferral of up to three months

  • High-cost short-term credit (HCSTC) consumers, such as those with payday loans, who have not yet had a payment deferral would be eligible for a payment deferral of one month.

  • Borrowers will have until 31 January 2021 to request an initial payment deferral.

  • A payment deferral would not be reported as missed payments on a borrower’s credit file.

The FCA said those who have already benefited from two payment deferrals, or one for HCSTC, and are still experiencing payment difficulties should speak to their lender regarding tailored support, and noted that borrowers who can afford to make repayments should continue to do so.

It is asking for comment on the proposals by 10am on 6 November with the final guidance published as soon as possible after the comment period closes.

READ MORE: FCA unveils proposed UK mortgage payment holiday details

Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “We recognise the challenges that many consumers face as the coronavirus crisis develops, and we are working to ensure support remains available to consumers who need it.”

Firms will also continue to offer tailored support to overdraft borrowers, as set out in September, the regulatory body said.

Earlier this week the FCA outlined the details on its proposal to extend the availability of mortgage payment holidays.

Consumer group Which? has urged lenders to “take a proactive approach” to ensure there is “adequate support available” for people who need it. Which? also called for the FCA to be “ready to intervene if there is any indication that customers are not getting the support they need quickly enough.”

Recent figures from UK Finance reveal around 162,000 mortgage payment holidays are in place, down from a peak of 1.8 million in June.

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