Coronavirus (COVID-19)—FCA confirms package to help users of consumer credit products

Coronavirus (COVID-19)—FCA confirms package to help users of consumer credit products

Following a short consultation, the Financial Conduct Authority (FCA) has confirmed the package of targeted temporary measures to help people with some of the most commonly used consumer credit products who are affected by the coronavirus (COVID-19) pandemic. The rule changes will be in force from 9 April 2020 and the full range of measures will apply by 14 April 2020. This is to allow firms time to ensure they have the appropriate level of resources available to handle customer requests. All firms will be ready to receive customer requests by 14 April, although some firms, including the major banks and building societies, will be adopting the changes immediately.

In response to the consultation, the guidance now includes clarification on which products are in scope. In particular, the FCA has confirmed that the following products are covered: guarantor loans, logbook loans, home collected credit, a loan issued by a Community Development Finance Institution, and some loans issued by credit unions, but only where these are regulated. The guidance also applies to firms which have acquired such loans.

The measures include firms being expected to:

• offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by coronavirus

• allow customers who are negatively impacted by coronavirus and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months

• make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force

• ensure consumers using any of these temporary payment freeze measures will not have their credit file affected

The measures will not replace normal forbearance rules where these would be more suitable for a consumer in serious and immediate financial difficulty. Consumers in financial difficulty should contact the Money Advice Service for further guidance.

Source: FCA confirms temporary financial relief for customers impacted by coronavirus

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