The Money Advice Trust, the charity that runs National Debtline and Business Debtline, has called on the Financial Conduct Authority to “close the gaps” in its package of support for consumer credit customers affected by the Covid-19 outbreak. The charity has welcomed the FCA’s proposals on credit cards, loans and overdrafts – but is calling for further action including:
- Action on other types of borrowing including hire purchase agreements, guarantor loans and other high cost short term credit products
- Requiring firms to suspend interest on credit card or loan payments that will otherwise be accrued during payment deferrals
- Extending the measures to cover micro-businesses with business credit cards, business overdrafts and other business lending products
In its full response to the FCA’s emergency consultation on the measures, announced last Thursday, the Money Advice Trust said the regulator “should also be prepared to extend these measures beyond three months if necessary”, and called on the FCA to issue a “formal reminder” to firms on their responsibilities to vulnerable customers in the specific context of the Coronavirus outbreak.
Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said: “The FCA has done the right thing by stepping in on credit cards, loans and overdrafts – but the regulator must now close the gaps in its support package to ensure that all customers receive the help they need through Covid-19.
“We need to see similar protections for people with hire purchase agreements, guarantor loans and other high cost short term credit products – and also micro-business customers who are struggling to keep up with business credit cards, overdrafts and other lending.
“Crucially, we all need to have one eye on the future – and what happens when these temporary measures from the FCA end. Suspending interest on credit cards and personal loans during the three-month payment deferral period will help to prevent further financial difficulty later on.
“Financial services firms have made good progress on supporting vulnerable customers in recent years – but the Coronavirus outbreak will be their biggest test yet in this crucial area. The FCA should issue a formal reminder of firms’ responsibilities on vulnerability in the specific context of the Covid-19 outbreak. It is crucial that those who are most vulnerable are supported in every way possible at this difficult time.”