Last week the UK’s financial market regulator suggested a smattering of relief measures to protect people affected by the coronavirus. Now those measures have snapped into action.
The Financial Conduct Authority (FCA) has confirmed a package of targeted temporary measures to help people with some of the most commonly used consumer credit products.
The rule changes are already enforced and the full range of measures will apply by Tuesday April 14 2020.
From now on, firms are expected to offer a temporary payment freeze on loans and credit cards for up to three months for consumers negatively impacted by the coronavirus.
Secondly, they are also expected to allow those customers who already have an arranged overdraft on their main personal current account up to £500 charged at zero interest for three months.
They are also expected to ensure 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.
The final measure is to make sure consumers using any of these temporary payment freeze measures will not have their credit file affected.
“We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic,” said Christopher Woolard, interim chief executive at the FCA. “The measures we’ve announced are designed to provide people affected with short-term financial support through what could be a very difficult time. The changes will provide support for consumers with credit cards, loans and overdrafts, facing temporary financial difficulties because of the pandemic.
“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.”
These measures cover 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.
These measures won’t replace normal forbearance rules where these would be more suitable for a consumer in serious and immediate financial difficulty. Consumers in financial difficulty should contact the Money Advice Service (MAS) for further guidance.
Copyright © 2018 RegTech Analyst
