Loan and Credit Card Payments to Freeze for Three Months in UK | Credit card
The financial regulator has announced plans to freeze loan and credit card payments for up to three months as part of emergency measures for consumers affected by the coronavirus outbreak.
The measures, which would typically require lengthy consultation, could go into effect as early as April 9. The Financial conduct authority said the process was being expedited “given the national emergency and the significant impact on consumer finances at this time”.
It is aimed at consumers and tenants who do not benefit from existing relief measures that have targeted homeowners – with mortgage payment holidays – or business owners.
The proposals include a temporary freeze on loans and credit card payments for consumers facing financial hardship due to the outbreak.
The FCA said that consumers who were risk of having their credit cards suspended due to the regulator’s new accessibility rules would not lose access to their accounts.
Lenders would also have to waive interest charges on arranged overdrafts of up to £ 500 in the same period, which would extend relief already announced by some banks including Barclays, HSBC and Lloyds.
Consumers who tap into unauthorized overdrafts would also benefit. Most banks have started charging a single interest rate 39.9% for arranged and unauthorized overdrafts under new rules intended to standardize fees this month.
But the FCA’s emergency measures are forcing companies to make sure all customers aren’t “worse off” as a result of the changes, which means some customers may revert to lower interest rates.
Banks and credit card providers will need to ensure that consumers’ credit scores are not affected by any of the measures, the FCA said.
FCA Acting Managing Director Christopher Woolard said: “The coronavirus has caused unprecedented financial shock with far-reaching consequences for consumers across 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 difficult time.”
The news was welcomed by consumer advocates including Martin Lewis, who said it would help level the playing field for customers who may not have time to seek better rates during the crisis.
Lewis, the founder of MoneySavingExpert.com, said: “We’ve already seen a lot of unsecured lenders put in place forbearance criteria… However, the layout is patchy and has become a bank lottery and that’s unfair – no one could not have taken this into account when signing up for products how considerate every lender would be in these extraordinary times.