Banks Told to Freeze Payments on Loans and Credit Cards
April 2, 2020
Banks are being told to freeze payments associated with personal loans and credit cards for up to three months to help people cope with the financial pressures they’re facing due to coronavirus.
The instruction comes from the Financial Conduct Authority (FCA), which regulates the entire financial services sector across the UK.
Banks and other lenders have been given until Monday April 6th to respond to the proposals put forward by the FCA, with a potential implementation date of April 9th having been earmarked.
Other new rules that the regulator wants to see introduced include giving people affected by the coronavirus situation access to a £500 interest free overdraft facility for up to three months.
It has also been made clear to lenders that anyone who makes use of emergency facilities in the context of the coronavirus crisis should not see their credit rating impacted as a consequence.
“Coronavirus has caused an unprecedented financial shock with far-reaching consequences for consumers in every corner of the UK,” said Christopher Woolard, interim chief executive at the FCA.
“If confirmed, this package of measures we are proposing today will help provide affected consumers with the temporary financial support they need to help them weather the storm during this challenging time.”
The FCA has said that it doesn’t expect banks and other lenders to introduce the measures it’s outlined until the relevant rules come into effect, potentially from April 9th, and that consumers don’t need to contact their lenders about the details until then.
The regulator also suggests that anyone who can still afford to keep paying off their credit card or personal loan debts should continue doing so, not least because that’s likely to be in their own best interests over the longer term.
Another point made by the FCA in its guidance on these measures is that there’s nothing to stop lenders offering more generous assistance in support of their customers whose finances are badly impacted by the coronavirus situation.
A potential indicator of just how many people could be facing serious financial concerns as a result of coronavirus came on April 1st when it was revealed that there were around 950,000 new applications for Universal Credit across the UK in the second half of March.