Aneesh Varma, Founder and CEO at Aire, comments: “We welcome the FCA’s proposed measures to support users facing financial difficulties due to coronavirus, however, we feel that a period of three-months is unlikely to be a long enough timeframe. Lenders will need to show forbearance for many months to come.
“Millions of consumers will experience a great deal of pain over the coming months, and this crisis will test the limits of lenders’ ability to understand what is happening in their loan portfolios, and their ability to support customers experiencing difficulties.
“Employers have already let people go in large numbers in sectors such as hospitality, travel, leisure, retail, arts and entertainment. Many of those already affected are young people working for minimum wage. We can expect many of the UK’s 5.8 million self-employed, freelancers and full-time gig workers to be hit soon after.
“Lenders can expect to see default rates increase dramatically throughout 2020 and possibly well into next year too. Aire estimates that the number of people in the UK missing one or more credit payments could increase from around 700,000 last year to over 2 million this year.
“Lenders are, understandably, stretched and struggling to build accurate, up-to-date pictures of their customers. As the crisis develops, and customer facing teams continue to be disrupted by school closures and enforced isolation, lenders will be challenged to provide the scale of support required by those customers who desperately need it.”