Regulatory proposals for lenders to offer a temporary payment freeze on loans and credit cards, for up to three months, have been confirmed and extended to a wider range of creditors.
The Financial Conduct Authority (FCA) has confirmed today (April 9) it’s going ahead with a package of measures that ensure lenders offer temporary payment relief to customers affected by Covid-19.
The announcement followed a short consultation and after debt charities called for the relief to be offered across a wider range of loans, the FCA clarified which products are in scope.
The following products are now 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 debt purchasers which have acquired such loans, and the FCA said more announcements are coming soon that cover car finance. As previously announced, the measures set out expectations for lenders to:
"We know there is still more work to be done, and we will announce further measures"
Christopher Woolard, interim chief executive at the FCA, said: “We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic.
“The measures we’ve announced are designed to provide people affected with short-term financial support through what could be a very difficult time.”
He added: “We know there is still more work to be done, and we will announce further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week.”
The rule changes will be in force from today and the full range of measures will apply by April 14.
All firms will be ready to receive customer requests by 14 April, although some firms including the major banks and building societies, have already adopted the changes.
Consumers have been urged to check firm websites or social media posts for more information, and where possible use online services to request assistance. The FCA said this will reduce the pressure on firms experiencing a high demand in calls throughout call centres.
The FCA said the measures won’t replace normal forbearance rules where these would be more suitable for a consumer in serious and immediate financial difficulty.