FCA Extends Help For Virus-Hit Consumer Credit Customers

By Irene Madongo
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Law360, London (November 20, 2020, 12:38 PM GMT) -- Borrowers struggling to repay credit-card debt, motor finance and similar bills because of the COVID-19 crisis have been given more time to defer payments, the Financial Conduct Authority has said.

Consumers wanting to apply for a deferral on their debt payments for the first time have until March next year to do so. They will be able after that date to extend existing deferrals until the end of July, the FCA said. The same deadlines will apply for consumers seeking a further deferral of payments.

People who are in arrears or receiving tailored support from a lender or other company will not be eligible for further payment deferrals — also known as freezes or holidays — the regulator said in its financial guidance on consumer credit, published on Thursday.

Borrowers could get tailored support from a business if it assesses that a payment break is not in the customer's interest. The regulator cautioned that borrowers should take payment holidays only if "absolutely necessary," and urged those who can still make payments to continue doing so.

"For those continuing to face payment difficulties as a result of coronavirus, these measures will ensure they continue to be able to access much-needed support during this crisis," Sheldon Mills, interim executive director of strategy and competition at the FCA, said.

The guidance says that payment holidays should not be recorded as missed payments on a customer's credit file, but tailored support may be reported as such.

The measures announced on Thursday will apply to people who use services and products such as credit cards, store cards, personal loans, catalog credit and motor finance.

Building societies and banks also announced this week that they will be allowing further relief to homeowners with mortgages up to the end of July next year, in line with FCA measures on deferrals.

Regulators have also sought to help finance companies cope during the coronavirus crisis. The FCA said in August that it would relax rules on how they must account for any reduced rent they paid during the pandemic.

--Additional reporting by Lucia Osborne-Crowley. Editing by Ed Harris.

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