The Financial Conduct Authority is looking to push through a range of temporary measures to support customers of credit products who are facing financial issues due to the impact of coronavirus.
The proposed package, published this morning (March 2), would require banks to offer a temporary payment freeze on loans and credit cards for up to three months.
The regulator said other measures, such as reductions in monthly payments could also be considered.
Under the proposals, consumers who need additional financial support with an existing arranged overdraft will be able to request from their provider that up to £500 on their main personal current account is provided at 0 per cent for up to three months.
Those without an overdraft are also able to request this.
The FCA said where consumers can still afford to make payments, they should make them as normal as this would be in their best long-term interest.
Christopher Woolard, interim chief executive of the FCA, said: “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.”
The regulator’s previously announced overdraft rules come into force from Monday, which require banks to only charge a single annual interest rate for arranged and unarranged overdrafts.
Over the next 3 months, banks must ensure all consumers are no worse off and not paying more than they would under previous prices.
The temporary changes have been designed to complement measures already announced by the government to support mortgage holders and tenants as well as furloughed employees and the self-employed.
The FCA is running a short consultation on the measures but said given the urgency and impact on consumers’ finances the deadline is next Monday (April 6), with measures expected to come into force from April 9.
The regulator has urged consumers to not contact their lender just yet as they do not have to put these measures in place until they come into force and it may take a short period of time for banks to put in place arrangements to provide these measures.
The FCA expects to make a further announcement about these measures next week.
What do you think about the issues raised by this story? Email us on email@example.com to let us know.