FCA extends credit card payment freeze
The Financial Conduct Authority (FCA) has announced that credit card, store card, catalogue credit and personal loan customers will be allowed to defer repayments for a further three months.
The repayments extension has been issued as millions of people across the UK are still struggling financially due to the impact of the coronavirus pandemic.
The new rules also mean that those who have not yet requested a payment freeze or applied for an arranged interest-free overdraft of up to £500, can do so until 31 October 2020.
The financial watchdog has also told banks and lenders that they should continue to offer support with options including a further payment deferral or reducing payments to an amount the customer can afford for a further three months.
The FCA has said that the end of a payment freeze, firms should contact their customers to find out if they can resume payments – and if so, agree a plan on how the missed payments could be repaid.
However, this has led some debt charities to warn of the potential for individuals’ financial problems to simply be stored up for a later date. With this in mind, the watchdog has urged that if customers can afford to return to regular repayment it is in their best interest to do so.
The FCA also ruled that the extension of any payment freeze will not negatively impact an individuals’ credit score.
Christopher Woolard, interim chief executive at the FCA, said: “We have been working closely with other authorities, lenders and debt charities to support consumers in the current emergency. The proposals we’ve announced today would provide an expected minimum level of financial support for consumers who remain in, or enter, temporary financial difficulty due to coronavirus. Where consumers can afford to make payments, it is in their best long-term interest to do so, but for those who need help, it will be there.
“However, the payment freeze extension does not apply to other consumer credit products, such as motor finance, high-cost short-term credit, rent-to-own, pawnbroking and buy-now-pay-later schemes.”
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