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Following on from the further help to homeowners which we detailed here, the Financial Conduct Authority (FCA) has proposed a continuation of support for users of certain credit products who are facing a financial impact due to the circumstances of Coronavirus.
The proposals outline the support that firms would be expected to provide to customers that are coming to an end of a payment freeze, or those customers who haven’t yet requested one, on products including credit cards, personal loans and revolving credit such as catalogues and store cards.
For any customer yet to request a freeze, or request an interest free overdraft of up to £500, the time to apply for one would be extended until the 31st October 2020.
For customers that have already taken up the support but are still experiencing temporary payment difficulties due to Coronavirus, firms would continue to offer further support options such as, further payment deferrals or reducing the payments to an amount that their customers can afford for a further three months.
The proposals include;
Support for overdraft customers – allowing customers who are negatively impacted by Coronavirus and who already have an arranged overdraft on their main personal current account, to request up to £500, interest-free, for a further 3 months, and providing further support in the form of lower interest rates on borrowing above the interest-free buffer, and repayment plans for those who would benefit from them.
When firms implement this guidance, they should be particularly aware of their vulnerable customers and should consider the ways they engage with them. Firms should help customers understand the types of debt help and money guidance that are available to them and encourage their customers to access any resources that could help them.
The FCA states that this guidance only applies to credit cards and other revolving credit such as store cards and catalogues as well as personal loans and overdrafts.
The guidance doesn’t cover such things as motor finance, payday loans, rent to own, buy-now-pay-later or pawn broking. However, the FCA states that there will be separate guidance to cover this at a later date.
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