While KPMG understands the Financial Conduct Authority’s (FCA) proposals to soften the financial blow of COVID-19, the professional services firm reminded the regulator that the crisis is not easy for banks either.
The FCA unveiled a smattering of new proposals earlier this week to help those at risk of financial harm during the current pandemic.
The range of proposed measures included 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, that customers with an arranged overdraft of up to £500 will be charged at zero interest for up to three months, and that banks do not downgrade people’s credit scores because of the crisis.
Paula Smith is the UK head of banking at KPMG UK and she welcomed the regulator’s proposal.
“COVID-19 has plunged a great many otherwise financially secure consumers into the ‘vulnerable’ category,” she said. “Of course it’s right that the regulator and banks do everything possible to support those hit by a sudden loss of income. Many banks have already made progress on the measures the FCA has proposed but it makes sense for the regulator to ensure banks are operating consistently as it will make life a lot easier and fairer for consumers.
“That said, none of this is easy for banks. Despite all the tech investment we’ve seen in recent years a lot of bank processes are manual and many of their systems can’t be changed quickly. As banks negotiate so much change in such a short space of time and with more limited staff, extreme care is needed to ensure policy changes are thought through from every possible angle. Otherwise banks risk overlooking segments of society or running into unintended consequences that could cost them dearly in the long term. All eyes are on the banks right now to check that people are being put before profits.”
Market stakeholders have until Monday April 6 to offer their insights on the proposals, which could be coming into effect as early as Thursday April 9 2020.
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