UK Finance has welcomed the Financial Conduct Authority’s (FCA) consultation proposals providing continued support to customers with credit cards, personal loans and overdrafts and will work “closely with the FCA to help it finalise its guidance as quickly as possible”.
This draft guidance follows extensive collaboration between the industry and regulator and provides important clarity on how lenders can support those customers that need it.
For borrowers yet to request a payment freeze or an arranged interest-free overdraft of up to £500, the time to apply for one would be extended until 31 October 2020.
For those who have already taken up support and are still experiencing temporary payment difficulties due to coronavirus, firms would continue to offer support with a range of options available.
Interest will normally continue to be charged during payment deferrals and so customers should consider their options carefully and only apply or extend a deferral if they are facing temporary financial difficulties and need immediate help.
UK Finance said customers in more severe financial difficulty should speak to their lender about the most appropriate action to take, which could include speaking to an independent debt charity to talk through the options and agree a way forward.
As of 12 June 2020, UK Finance members have offered 27 million interest-free overdrafts, provided 961,700 payment deferrals on credit cards and 688,900 payment deferrals on personal loans.
Eric Leenders, UK Finance managing director, personal finance, said: “The banking and finance industry has a clear plan to help the country through these tough times and is committed to providing ongoing support to those customers who need it.
“The FCA draft guidance follows extensive collaboration between the industry and regulator and provides welcome clarity on the potential next steps available to consumer credit customers.”
He added: “The industry will be responding to these draft proposals and looks forward to the regulatory guidance being finalised swiftly to ensure both borrowers and lenders can plan ahead to ensure customers can have some peace of mind regarding the consequences of Covid-19 on their money.”
“For those who can afford to restart repayments, it is in their best long-term interest to do so; however, there are a range of options available to support customers who cannot repay just now and lenders stand ready to help.”
The news comes as the CEO of UK Finance,Stephen Jones, has announced his resignation, days after apologising to colleagues for alleged sexist remarks he made about financier Amanda Staveley.
The remarks in question were allegedly made by Jones 12 years ago, when he was a senior executive at Barclays.