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 publishes evaluation of its work on the financial advice market04/12/2020 10:25:00
The FCA has published an evaluation of the impact of the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR).
1 month to go: FCA reminds firms to be ready for end of transition period02/12/2020 10:25:00
The FCA has reminded firms to be ready for the end of the transition period in 1 month’s time.
FCA charges Richard Jonathan Faithfull with one offence of money laundering27/11/2020 10:25:00
Following a joint investigation by the Financial Conduct Authority and City of London Police, the FCA has charged Richard Jonathan Faithfull with one offence of money laundering, contrary to Section 327 of the Proceeds of Crime Act.
Stephen Allen pleads not guilty to conspiracy to pervert the course of justice26/11/2020 10:25:00
Stephen Allen has pleaded not guilty by video link at Southwark Crown Court to the FCA’s charge that he conspired with Renwick Haddow to pervert the course of justice.
FCA fines TFS-ICAP £3.44 million for market misconduct24/11/2020 10:25:00
The Financial Conduct Authority (FCA) has fined TFS-ICAP Ltd, an FX options broker, £3.44m for communicating misleading information to clients.
Treasury, Bank of England and FCA convene working group to facilitate investment in productive finance20/11/2020 15:05:00
The Treasury, the Bank of England (Bank) and the FCA will be convening an industry working group to facilitate investment in productive finance.
FCA confirms support for mortgage borrowers impacted by coronavirus18/11/2020 10:25:00
On 2 November, the Financial Conduct Authority (FCA) announced proposals to enhance support for borrowers affected by coronavirus (Covid-19).
FCA commences High Court proceedings over unauthorised collective investment schemes12/11/2020 10:25:00
The FCA has commenced High Court proceedings against Mr Robin Forster, Fortem Global Limited and Mr Richard Tasker, over alleged links to investments in care homes in which investors appear to have lost at least £30 million.
FCA bans three individuals from working in the financial services industry for non-financial misconduct06/11/2020 10:25:00
The Financial Conduct Authority (FCA) has prohibited Russell David Jameson, Mark Horsey, and Frank Cochran from working in the financial services industry following findings that they are not fit and proper. Each of them had been convicted of serious non-financial indictable offences while working in the financial services industry.