FCA ‘right to give more time’ to consumer credit customers impacted by Covid-19

The Money Advice Trust, the charity that runs National Debtline and Business Debtline, has welcomed proposals from the Financial Conduct Authority that will see continued support for people with credit cards, overdrafts and personal loans whose finances have been impacted by the Covid-19 outbreak.

The proposed measures include:

  • Requiring firms to contact credit card and loan customers on payment freezes to establish if they can resume payments
  • Ensuring that those still facing financial difficulty due to Covid-19 are offered freezes or reduced payments for a further three months
  • Allowing overdraft customers to request up to £500 interest-free overdraft for a further three months
  • Extending the time that customers can apply for payment freezes or an interest-free overdraft until 31st October, to cover customers impacted by Covid-19 at a later date

The announcement follows the FCA’s extension of support for mortgage holders announced at the end of May, with the regulator confirming that separate guidance covering further relief on other forms of consumer credit will follow.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said: “The FCA is right to give more time for people who are struggling to make credit card and loan payments as a result of Covid-19, and the extension of interest-free overdrafts for a further three months is also welcome.

“The financial shock to households that the outbreak has caused is like nothing we have seen before, and we expect debt problems to increase significantly in the months ahead. We are pleased that these measures apply not only to customers who have already taken up support, but those who will unfortunately become affected in the coming months.

“While these measures clearly cannot last forever, many people are going to need support beyond even this extended period – and we need to make sure that these customers get the support and advice they need as their finances recover from the outbreak.”