Coronavirus: FCA confirms measures to help consumers
14 April 2020: the FCA has confirmed that it will allow firms the flexibility to provide temporary financial relief for those facing payment difficulties during the COVID-19 pandemic, but there is no news on specific motor finance measures.On 9 April, the Financial Conduct Authority (FCA) confirmed its proposed measures to support consumers with credit cards, loans and overdrafts, in addition to the previously announced mortgage support.
In the statement, the regulator also clarified that the measures will apply to guarantor loans, logbook loans, home-collected credit, a loan issued by Community Development Finance Institution and some loans issued by credit unions (where these are regulated).
The FCA will review the guidance in three months and give further instruction to firms.
The key things firms will have to offer customers affect by coronavirus are:
- A three-month payment freeze on loans and credit cards
- £500 of an arranged overdraft at 0% interest for three months
- Ensure customers are no worse off than before the recent overdraft pricing changes
- Make sure there is no effect on a customer’s credit file for using the measure
We're still waiting to hear about motor financeFor many households, car payments under a personal contract plan or lease can be one of their largest regular outgoings. To date, the FCA’s measures to freeze interest payments and offer payment holidays have not covered motor finance, but this may be addressed in the coming days. The FCA has made several interventions into motor finance in the past year as it is acknowledged costs are not always clear.
Tips for consumers
- Lenders may not need evidence to help you, but it is good to understand your financial position and expected incomings and outgoings with a household budget (see Money Advice Service Budget Planner for an example)
- Apply online where possible – call centres are incredibly busy, and many branches are closed.
- Consider whether you need a payment holiday – it can cost you more in the long term. If you can make even small payments, it will help. Depending on the type of debt and the interest rate, and payment holiday may not be the best solution your lender can offer.
- If you’re in serious financial difficulty, which is not necessarily due to coronavirus, your lenders’ usual forbearance measures, including restructuring and payment plans, may be more helpful to you than the COVID-19 response measures. Contact the Money Advice Service on 0800 138 7777 for guidance.
For further support for consumers, please visit ICAEW's designated coronavirus (COVID-19) hub page.