The FCA has proposed a range of targeted temporary measures designed to quickly support users of certain consumer credit products who are facing a financial impact due to coronavirus. The package is intended to compliment measures already announced by the government.
As the measures would span a wide variety of firms, the FCA is conducting a brief consultation on its measures. It has asked that all stakeholders respond within a much shorter timeframe than normal – with a deadline of 9am on Monday 6 April 2020. If confirmed, the measures would start to come into force by 9 April 2020.
The FCA’s proposed measures include:
- Overdrafts – consumers who need additional financial support with an existing arranged overdraft on their main personal current account will be able to request that up to £500 is provided at 0% for up to three months. Customers who are currently without an overdraft on their main personal current account are able to request this facility.
- Credit cards, store cards and catalogue credit – customers would be able to ask for a three-month payment freeze or to pay a nominal payment on credit cards, store cards and catalogue credit. However, firms could consider other measures, such as reductions in monthly payments, if appropriate. Customer cards would not be suspended during this period.
- Personal loans – customers with personal loans would be able to ask for a three-month freeze if needed.
- Treatment of interest – with the exception of the £500 overdraft proposal, firms would be entitled to charge a reasonable rate of interest where a customer requests a temporary payment freeze. In the event that a customer requires full forbearance that interest should be waived.
Whilst these changes are proposed for regulated credit products, those providers of unregulated products (such as unregulated buy now pay later) should consider whether to implement similar payment breaks/forbearance to their own customers. Any such treatment would need to be carefully implemented to ensure that their products remain operating within the relevant exemption.
The FCA expects to make a further announcement about these measures next week.