The financial watchdog has set out a number of temporary measures to help consumers dealing with coronavirus financial shock including payment freezes on loans and credit cards, and interest-free overdrafts.
This is in addition to the already announced mortgage payment holidays for homeowners and landlords.
- Banks and other lenders to offer an up to three month payment freeze on loans and credit cards where consumers face difficulties with their finances as a result of coronavirus. Alternatively, customers will be able to pay a nominal amount on credit cards, store cards and catalogue credit.
- Those hit financially by coronavirus who already have an arranged overdraft on their main personal current account, will be charged 0 per cent on up to £500 for up to three months. Customers without an overdraft on their main personal current account are able to request this.
- Firms to ensure overdraft customers are no worse off on price than before recent overdraft changes came into force.
- Credit ratings protected so payments freeze will not impact ratings.
One week consultation
Banks, building societies and other lenders would be entitled to charge a reasonable rate of interest where a customer requests a temporary payment freeze. However, where a customer requires full forbearance that interest should be waived.
The regulator added the measures are not a substitute for the normal forbearance firms should show to those in serious and immediate financial difficulty.
But where consumers can still afford to make payments, they should do so as it is likely to be in their best long-term interest.
The proposals are subject to a short consultation period but the FCA said if confirmed, the measures would come into force a week today on Thursday 9 March.
Christopher Woolard, interim chief executive of the 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.”