FCA announces proposals to support high-cost credit customers facing financial difficulties due to coronavirus

New package of measures includes a one-month interest-free payment freeze on payday loan repayments

The Financial Conduct Authority (FCA) has announced a package of proposals to support high-cost credit customers facing financial difficulties due to coronavirus (COVID-19).

The new measures - intended to complement measures already introduced by the FCA to support loan and credit consumers during the coronavirus pandemic - include an expectation that payday lending firms will provide a one-month interest-free payment freeze to customers facing payment difficulties due to the coronavirus pandemic.

In addition, the FCA proposals include -

• an expectation that firms that enter into right to own (RTO), buy now pay later (BNPL), or pawnbroking agreements provide a three-month payment freeze to customers facing payment difficulties due to coronavirus;
• extending BNPL promotional periods, where a customer is still in that period, by the length of the payment freeze;
• suspending repossession of RTO goods if a customer needs the goods during the payment freeze period;
• extending pawnbroker redemption periods for the three-month payment freeze period or, if a redemption period has already ended, agree not to serve notice to sell an item; and
• a three-month payment freeze for customers who are having temporary difficulties meeting motor finance or leasing payments due to coronavirus.

NB - further details of the FCA’s expectations on firms are outlined in draft guidance on high-cost credit; rent to own, buy now pay later and pawnbroking; and motor finance.

The FCA says that it intends to finalise its proposals by 24 April 2020, with them coming into force shortly afterwards, and invites comments by 20 April 2020.

For more details see FCA proposes help for motor finance and high-cost credit customers from fca.org.uk