The Financial Conduct Authority (FCA) has outlined its proposals to bolster support for consumer credit borrowers struggling with the financial impact of the Covid-19 pandemic.
Earlier this week, the watchdog announced plans to extend payment holidays credit cards, car finance, personal loans and pawnbroking as England prepares to enter a fresh national lockdown tomorrow.
Under proposals announced today, consumer credit customers who have not yet had a payment holiday during the pandemic would be eligible for two payment deferrals lasting up to a total of six months.
Those who have already been granted a payment holiday would be eligible for another deferral of up to three months, the regulator said. Borrowers with high-cost short-term credit products such as payday loans would be eligible for a one-month payment deferral, if they have not already taken one.
Under the proposals, customers would have until 31 January to apply for their first payment holiday.
“We recognise the challenges that many consumers face as the coronavirus crisis develops, and we are working to ensure support remains available to consumers who need it,” said Sheldon Mills, the FCA’s interim executive director of strategy and competition.
“We know that many consumer credit borrowers are vulnerable. That’s why tailored support reflecting borrowers’ individual circumstances will still be offered and remains the most appropriate option for many.”
However Mills added: “It is in borrowers’ own long-term interest only to take a payment deferral when absolutely necessary. Those that are able to keep paying, should do so.”
The FCA is inviting comments on the new proposals by 10am on 6 November.