Credit card payments, revolving credit agreements and personal loan debts can receive further support form today. The financial regulator confirmed that customers who have yet to request a payment freeze or an arranged interest-free overdraft of up to £500, will have until October 31 to apply for one.
Additionally, those who have or are already on a payment holiday can receive additional support and extensions from their providers.
Full details of the extension can be found on the FCA’s website and the changes made were welcomed by certain public institutions.
In response to the announcement Andrew Johnson, a Money Expert at the Money and Pensions Service, had the following to say: “The extension of support measures confirmed today for credit card, personal loan and overdraft customers could be helpful for people who are experiencing temporary payment difficulties, as we know that Covid-19 is continuing to affect people’s finances.
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“It’s really important that people speak to their lenders to find out what options are available and appropriate for them, and consider what this will mean for their repayments in the long term.”
StepChange were also very welcoming of the announcement, with Peter Tutton, the Head of Policy at the charity, providing the following comments: “This extension of support for people with credit cards and revolving credit is crucial, as millions of people are not yet in any way back to normal financially.
“Our research suggests that millions of people have had to borrow to make ends meet, with 1.7 million people turning to their credit card and 1.6 million to their overdraft.
“Overdrafts will need careful oversight as the support measures become more discretionary on the part of banks.”
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“While some people will be getting back to work and will be able to resume their normal commitments – which is in their best interests, if it’s possible – others are still a long way from being able to do this and will need careful and structured support for a longer period.”
On top of these changes, the FCA has today confirmed proposals for further support for high cost credit products.
As the FCA detailed this morning: “The proposals outline the options firms will provide motor finance, buy-now pay-later (BNPL), rent-to-own (RTO) and pawnbroking customers who are coming to the end of a payment freeze, as well as those who are yet to request one.
“For customers yet to request a payment freeze, the time to apply for one would be extended until 31 October 2020.
“For motor finance, BNPL, RTO and pawnbroking customers that have already taken up support, and who are still experiencing payment difficulties, firms would continue to offer support with options including a further payment deferral or reducing payments to an amount the customer can afford for a further three months.”
These FCA explained that they are looking for comments and feedback on the new proposals they set out, with a deadline of July 6.
Once this deadline ends, the FCA will likely make the new rules official in the following days.
The proposals set out offer similar extensions to what was seen for credit cards, with the following additional elements:
- Firms should provide customers with support by freezing or reducing payments to a level they can afford, on their motor finance, BNPL or RTO agreements for a further three months.
- For BNPL customers, where a loan is within the promotional period, this would mean offering customers an additional extension to that period.
- For pawnbroking agreements, where the loan is within the redemption period, this would mean firms extending that period for three months or agreeing not to sell or suspending the sale of an item for three months if the redemption period has already finished.
- For HCSTC customers who have had a payment freeze and are still experiencing payment difficulties, firms should be providing a range of support – including formal forbearance – in accordance with the FCA Handbook.