The FCA propose three month holidays extend to credit cards – expert calls for more
CORONAVIRUS has forced the government to make drastic changes to various economic rules. So far changes have been made to mortgage arrangements, employment rules and benefit systems but the FCA is proposing further changes.
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Coronavirus is expected to have continuing negative effects on the economy. Incomes will likely lower and employment will dry up as the disease impacts business and trade. The government has already taken steps to provide safety nets for people’s finances but more changes could be inbound.
The Financial Conduct Authority (FCA) is the financial regulator for the UK and a few days ago they proposed further measures.
While their proposals are still in a consultation face, they aim to have them go live by 9 April.
They have proposed several alterations to interest rates, overdrafts and various loan agreements.
Christopher Woolard, the Interim Chief Executive of the FCA provided comments along with the announcement.
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As he detailed: “Coronavirus has caused an unprecedented financial shock with far-reaching consequences for consumers in every corner of the UK.
“If confirmed, this package of measures we are proposing today will help provide affected consumers with the temporary financial support they need to help them weather the storm during this challenging time.”
Generally, the measures proposed work in a similar way to the newly announced mortgage and rental holidays.
A temporary relief on certain financial assets will be provided for up to three months.
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Credit cards, store cards and catalogue credit will be among some of the things provided with a freeze.
As the announcement laid out: “Customers facing financial challenges due to coronavirus would be able to ask for a three-month payment freeze or to pay a nominal payment on credit cards, store cards and catalogue credit.
“Firms could consider other measures, such as reductions in monthly payments, if appropriate.
“In addition, customer cards would not be suspended during this period.”
Personal loans would also face a freeze if the customers end up struggling financially due to coronavirus.
As the FCA made the announcements, several organisations and experts in the field voiced approving support.
The Financial Wellness Group was one among said organisations but they believe that further action could still be taken.
Deborah Ware, the Chief Operating Officer for the firm commented on what else could be done: “with millions of people experiencing an income drop because of coronavirus, these new measures will be very welcome.
“To make the scheme quick and simple to implement and to ensure that all lenders treat customers consistently, interest and charges should be frozen during the three-month payment break period.
“It’s vital that consumers don’t find that their debt has increased whilst they are unable to meet their repayments
“Advice providers can play a central role in this new scheme: for consumers looking for assistance, a regulated debt advice provider can contact all their lenders on their behalf.
“Advice providers make this type of request daily and can deal efficiently with lenders.
“When these measures expire, after three months, there will be a further spike in demand for debt advice and the FCA, MaPS and HM Treasury should ensure the sector is adequately resourced to ensure all who need advice are able to access it.”