Credit companies must offer credit card and loan payments freeze, says FCA

A temporary payments freeze on loans and credit cards for up to three months are amongst a package of targeted temporary measures confirmed by the Financial Conduct Authority (FCA) today to help people negatively affected by the coronavirus pandemic.

Credit companies must offer credit card and loan payments freeze, says FCA

Christopher Woolard, interim chief executive at the FCA

Following a short consultation, the FCA will be going ahead with the proposals outlined last week, which will give firms the flexibility under our rules to provide temporary financial relief to those facing payment difficulties during the COVID-19 pandemic.

The new measures will also allow customers impacted by COVID-19 and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months.

Firms must also ensure that all overdraft customers are no worse off on price when compared to the prices they were charged before recent overdraft pricing changes were enforced.

Companies must also ensure customers’ credit scores are not affected by the temporary freeze measures.

The rule changes will be in force from today and the full range of measures will apply by Tuesday 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 offering consumer credit products 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 today.

Christopher Woolard, interim chief executive at the FCA, said: “We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic. The measures we’ve announced are designed to provide people affected with short-term financial support through what could be a very difficult time.  The changes will provide support for consumers with credit cards, loans and overdrafts, facing temporary financial difficulties because of the pandemic.

“Customers should think carefully before making use of these measures and only do so if they need immediate help.  Where they can still afford to make payments, they should continue to do so.

“We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week.”

Read all of our articles relating to COVID-19 here.

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