UK Banks Grant Breaks On 1.5M Credit Card, Loan Payments

By Najiyya Budaly
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Law360, London (May 29, 2020, 5:23 PM BST) -- British lenders have granted 1.5 million payment holidays to credit card and loan customers who are struggling to meet repayments because they have fallen ill or been furloughed during the coronavirus pandemic, a finance industry group said Friday.

UK Finance said that banks have frozen repayments for customers on 877,800 credit cards and 608,000 personal loans as of May 21. Payment holidays are aimed at giving financial relief to customers who have been financially hit by the pandemic.

The measure was announced by the Financial Conduct Authority in April to provide consumers with short-term financial support. Lenders can freeze repayments for up to three months but interest will normally continue to be charged, the watchdog said at the time.

"The banking and finance industry has put a clear plan in place to help Britain through these tough times," Stephen Jones, chief executive of UK Finance, said Friday. "Banks and building societies will continue to help their customers get through the crisis and have a wide range of support available."

The FCA's measures also include allowing lenders to offer customers three months of interest-free borrowing on the first £500 ($608) of their unarranged overdrafts. Banks have approved this on 27 million customer accounts, UK Finance said Friday.

The relief package supports measures announced by the government in March, which include banks supporting customers through so-called mortgage holidays. Lenders owned by the Lloyds Banking Group and the Royal Bank of Scotland have confirmed they will offer to defer mortgage payments from borrowers affected by the virus outbreak.

UK Finance said on May 22 that lenders have approved 1.8 million mortgage payment holidays so far.

"Lenders have now put in place support across over 30 million customer accounts, from the option of interest-free overdrafts to payment holidays for credit cards, personal loans and mortgages," Jones said Friday.

Banks and other lenders can also temporarily freeze payments on high-cost credit products, such as payday loans, car finance and rent-to-own contracts, the FCA has said.

--Editing by Alyssa Miller.

For a reprint of this article, please contact reprints@law360.com.

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