The Financial Conduct Authority has today announced further proposals to support consumer credit borrowers impacted by coronavirus.
Reacting to the announcement, Peter Tutton, Head of Policy at StepChange, says: “With millions of people’s livelihoods due to be affected by the coming national lockdown, renewed payment deferral support for consumer credit customers will be vital to help people stay afloat financially. However we would urge people using deferrals to continue making affordable payments where possible to help avoid building up bigger debts to deal with later on.
“However people who have already taken advantage of payment deferrals but need more help now should apply for tailored support from their lender. Unlike payment deferrals, people getting tailored support may see a deterioration in their credit rating. So we’re calling on the FCA to look at this again as those who have already had one or two payment holidays are just as likely to be affected by Thursday’s lockdown as those newly in need of support. The priority must now be to ensure people facing payment problems because of the pandemic are not plunged into longer term debt or financial exclusion where possible.
“Our own research has found household debt built up due to the pandemic had soared to more than £6bn in May, a figure almost certain to have swelled further in the past five months. With no end in sight to the coronavirus crisis, we need to see short-term fixes replaced by a long-term, cross-Government strategy that supports struggling households and prevents the build-up of unmanageable debt.”