FCA proposes temporary financial relief for customers impacted by coronavirus
The Financial Conduct Authority (FCA) has today proposed a range of targeted temporary measures designed as a stop-gap to quickly support users of certain consumer credit products who are facing a financial impact because of the exceptional circumstances arising from coronavirus.
This package is intended to complement measures already announced by the government to support mortgage holders (and renters) and the assistance being provided for furloughed employees and the self-employed, according to an FCA press release.
Given these measures would span a wide variety of firms the FCA is conducting a brief consultation on our measures. However, given the national emergency and the significant impact on consumers' finances right now, the FCA have asked all stakeholders to respond within a much shorter timeframe than normal – with a deadline of 9am Monday 6 April 2020. If confirmed the measures would start to come into force by 9 April 2020.
The FCA proposals include:
Setting out the FCA’s expectations on firms to offer a temporary payment freeze on loans and credit cards where consumers face difficulties with their finances as a result of coronavirus, for up to three months.
Ensuring that for customers who have been hit financially by the coronavirus and already have an arranged overdraft on their main personal current account, up to GBP500 will be charged at zero interest for up to three months.
Requiring firms to make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft changes came into force.
And ensuring consumers using any of these temporary measures should not have their credit rating affected because of this.
Christopher Woolard, Interim Chief Executive, 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.”
If confirmed, these measures will provide a short-term, temporary stop-gap, for a period of up to three months. These measures would provide an expected minimum level of financial support for consumers who until now have been financially stable. They are not a substitute for our normal forbearance where that would be more suitable for a consumer in serious and immediate financial difficulty. Where consumers can still afford to make payments, they should as normal and this is likely to be in their best long-term interest to continue to do so.
This guidance would not prevent firms from offering more generous assistance to their customers, and some already are.
The measures the FCA are proposing pertain to overdrafts; credit card, store card and catalogue credit; personal loan; and treatment of interest.
Further details about the measures being proposed can be found HERE.
The FCA will keep these measures under review, according to the press release.