Financial Conduct Authority
FCA confirms support for consumer credit customers impacted by coronavirus
The FCA has confirmed updated guidance to firms setting out enhanced support that should be available to consumer credit customers experiencing payment difficulties as a result of coronavirus (Covid-19).
The guidance covers users of personal loans, credit cards, store cards, catalogue credit, rent to own, buy now pay later, pawnbroking, motor finance and high-cost short-term credit.
The guidance will come into force on 25 November but the FCA encourages firms that are able to start providing this enhanced support sooner to do so.
The FCA reiterates that consumers should keep up with payments on their loans or credit products if they can afford to do so, and should only request payment deferrals (also known as freezes or holidays) where absolutely necessary. The FCA has also provided more detail about who is able to apply for payment deferrals under this finalised guidance.
The guidance sets out that:
- Those who have not yet had a payment deferral will be eligible to apply for payment deferrals of up to 6 months in total.
- Those who currently have a payment deferral will be eligible to apply for a further deferral, as long as the total length of deferrals doesn’t exceed a maximum of 6 months in total.
- Those who have previously had a payment deferral of less than 6 months will also be eligible to apply for a further payment deferral, as long as the deferrals don’t exceed 6 months in total.
- A firm may assess that a payment deferral is obviously not in a customer’s interest. In such cases, the firm should instead provide tailored support appropriate to the customer’s circumstances.
- Consumers who have already had 6 months of payment deferrals or who are in arrears or receiving tailored support, will not be eligible for a further payment deferral. Instead, firms will provide tailored support appropriate to their circumstances. This may include the option to defer further payments.
- High-cost short-term credit consumers, such as those with payday loans, will be eligible for a payment deferral of 1 month.
Sheldon Mills, interim Executive Director of Strategy and Competition at the FCA, said: ‘It is in a consumer’s best interest to only take a payment deferral when absolutely necessary. Those that are able to keep paying should do so.
‘However, for those continuing to face payment difficulties as a result of coronavirus, these measures will ensure they continue to be able to access much needed support during this crisis. We also want to highlight that tailored support will still be offered and remains the most appropriate option for many borrowers.’
Consumers who are struggling with the cost of their overdrafts as a result of coronavirus will be able to request support which reflects their individual circumstances, as set out in our tailored support guidance, published in September. This could include reducing or waiving interest.
Consumers will have until 31 March 2021 to apply for an initial or a further payment deferral. After that date, they will be able to extend existing deferrals to 31 July 2021, provided these extensions cover consecutive payments, and subject to the maximum 6 months allowed. If borrowers who have not yet taken a deferral think they need the full 6 months, they should apply in good time before their February 2021 payment (to cover a full six months of payments, from February to July inclusive).
A payment deferral under this finalised guidance would not be reported as missed payments on a consumer’s credit file. This does not mean that consumers’ ability to access credit will be unaffected, as lenders may take into account a range of information when making lending decisions.
Tailored support may be reported on a consumer’s credit file, and lenders should inform consumers where this will be the case. This would include any further payment deferrals offered.
The FCA will continue to keep the support available to consumers under review.
Notes to editors
- Finalised guidance on consumer credit products
- Our Tailored Support Guidance has been updated and will continue to be in place to provide support for those who will not be eligible for further payment deferrals under our proposals. A link to this updated guidance can be found on the finalised guidance page as outlined above.
- Feedback Statement FS20/18
- Information for consumers
Latest News from
Financial Conduct Authority
FCA bans Nigel Lewis and Susan Jones for incompetent British Steel Pension Scheme advice28/11/2023 10:25:00
The Financial Conduct Authority (FCA) has banned Nigel Lewis and Susan Jones of West Wales Financial Services Limited (in liquidation) (WWFS) from advising customers on pension transfers and pension opt outs. Mr Lewis has also been banned from holding any senior management functions in a regulated firm.
Unregulated Buy Now Pay Later (BNPL) firms becoming authorised24/11/2023 11:25:00
Prior to the UK leaving the EU, EEA-based firms were able to operate in the UK without our direct authorisation.
FCA censures NMC Health Plc (in Administration) for market abuse17/11/2023 16:15:00
The Financial Conduct Authority (FCA) has censured NMC Health Plc (NMC) for misleading the market about its debt.
FCA finds further work required to fully embed ‘Guiding Principles’ for ESG and sustainable investment funds17/11/2023 09:05:00
A review by the FCA has found that while most Authorised Fund Managers (AFMs) have made efforts to comply with the FCA’s expectations on the design, delivery, and disclosure of their ESG and sustainable funds, further improvement is needed.
FCA and PSR Boards appoint new members to decision-making committees16/11/2023 16:30:00
Ulrike Hotopp and Claire Whyley have been appointed to the FCA’s and Payment Systems Regulator's (PSR) Competition Decisions Committees (CDCs).
Two individuals guilty of making £3m worth of fraudulent mortgage applications16/11/2023 11:25:00
Larry Barreto, based in the East Midlands, was found guilty yesterday of 11 charges of fraud by false representation following a prosecution brought by the FCA.
Financial regulator secures confiscation order against convicted CFO06/11/2023 10:10:00
On 2 November 2023, Southwark Crown Court imposed a Confiscation Order of £355,369 against Timothy Coleman, former Chief Financial Officer of Redcentric Plc, following his convictions in February 2022 for false accounting and making misleading statements to the market.
FCA bans Geoffrey Armin for failures in advice given to British Steel Pension Scheme Members, with £200k to be paid in compensation06/11/2023 09:10:00
The Financial Conduct Authority (FCA) has banned Geoffrey Armin from advising customers on pension transfers and pension opt outs, and from holding any senior management function in a regulated firm.
Guidance for crypto firms to help them comply with marketing rules03/11/2023 09:25:00
Following a change in legislation, cryptoassets promotions targeting UK consumers now fall within our remit. We have introduced rules that are designed to give people a better understanding of what they are investing in, and the risks involved.