09 Apr 2020
People struggling financially due to Coronavirus will be offered payment holidays of up to three months on their credit cards and loans.
The Financial Conduct Authority (FCA) has announced a package of help giving temporary financial relief to people with commonly used consumer credit products.
The measures, which came into force today (Thursday, April 9), allows people to access a three-month payment freeze on their loans and credit card debts.
Under the rules, anyone with an arranged overdraft on their main personal current account will now be able to ask for interest charges on the first £500 to be wiped.
Credit scores will not be affected as customers will not be billed for the entire thee month period.
The FCA also said new measures to protect those on car finance will follow next week.
Payment freezes will be offered from today by HSBC, Lloyds, RBS, Barclays, Santander and Nationwide.
Other banks and lenders offering store cards, catalogue credit, guarantor loans, logbook loans, home-collected credit, credit unions and community development finance will offer payment freezes from 14 April.
Nevertheless the FCA has said customers should think carefully before making use of any of these measures and if they can still afford to make payments, then they should continue to do so. Furthermore these rules do not replace a lender’s normal forbearance rules which may be more appropriate for a customer in serious and immediate financial difficulty.
The FCA have said they will keep this guidance under review.
Christopher Woolard, chief executive of the FCA, said: "We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic.
"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."