FCA proposes three month payment freeze on loans and credit cards, and zero interest on up to £500 of arranged overdrafts, for those impacted by coronavirus

Proposals are among package of measures to be introduced from 9 April 2020 if confirmed following consultation

The Financial Conduct Authority (FCA) has proposed a three-month payment freeze on loans and credit cards, and zero interest on up to £500 of arranged overdrafts, for those impacted by coronavirus.

Intended to complement measures already announced by the government to support mortgage holders and renters, and the assistance being provided for furloughed employees and the self-employed, the FCA's proposals include -

• an expectation on firms to offer a temporary payment freeze for up to three months on loans and credit cards where consumers face difficulties with their finances as a result of coronavirus;
• a zero interest charge for up to three months on up to £500 of arranged overdrafts on customers’ main personal current accounts;
• imposing a requirement on firms that all overdraft customers are no worse off on price when compared to the prices they were charged before recent overdraft changes came into force; and
• an expectation that consumers using any of these temporary measures will not have their credit rating affected because of this.

Seeking views on the proposals in a consultation ending on Monday 6 April 2020, the FCA advises that, if confirmed, the measures would start to come into force on 9 April 2020.

NB - further details of the FCA’s expectations on firms are outlined in draft guidance on credit cards and retail revolving credit; arranged overdrafts; and personal loans.

Commenting on the proposals, Interim Chief Executive of the FCA Christopher Woolard said -

'Coronavirus has caused an unprecedented financial shock with far-reaching consequences for consumers in every corner of the UK. If confirmed, this package of measures we are proposing today will help provide affected consumers with the temporary financial support they need to help them weather the storm during this challenging time.’

For more information, see FCA proposes temporary financial relief for customers impacted by coronavirus (COVID-19) from fca.org.uk