The financial watchdog has presented proposals to further support customers of loans and credits.
The Financial Conduct Authority (FCA) is proposing to expand the payment holidays and other help available for personal loans, credit cards, auto financing, leasing with purchase option, buy it now and pawn shop that continue to incur payments. difficulties due to the coronavirus.
Under the proposals, those who have not yet benefited from a payment deferral will be eligible for two payment holidays of up to six months in total.
For those currently benefiting from an initial payment deferral, they will be entitled to another payment deferral of up to three months.
High Cost Short Term Credit (HCSTC) customers, such as those with payday loans, who have not yet had a payment deferral would be eligible for a one month payment deferral.
Additionally, borrowers would have until January 31, 2021 to request an initial payment deferral.
He also said that a deferral of payment under his proposals would not be flagged as missed payments on a borrower’s credit report.
However, this does not mean that a customer’s ability to access credit will not be affected in the future, as lenders may take a variety of information into account when making loan decisions.
When clients have already taken two payment holidays (or one for HCSTC) and are still having payment difficulties, the FCA said they should speak to their lender so that tailored support can be offered.
This also applies to those who have resumed their repayments after a first payment holiday, because they are not entitled to a further postponement, but should benefit from appropriate support in the event of payment difficulties.
Tailor-made support can be flagged in a borrower’s credit report, and lenders should notify borrowers when this is the case.
Sheldon Mills, Acting Executive Director of Strategy and Competition at FCA, said: “We recognize the challenges many consumers face as the coronavirus crisis unfolds, and we are working to ensure that support remains available to consumers who need it.
“We know that many consumer credit borrowers are vulnerable. This is why tailor-made support reflecting the individual situation of borrowers will always be offered and remain the most appropriate option for many. We are also proposing to extend payment deferrals for certain consumer credit products to provide additional support. “
Consultation on the proposals ends Friday, with FCA expecting final guidance to be released as soon as possible.
Support for other borrowers
The FCA also confirmed that companies will continue to offer personalized support to overdraft borrowers, including: