Compliance News – FCA Announces Further Support To Consumer Credit Customers

The FCA has proposed the extension of certain temporary measures that were put in place to support consumer credit customers who are facing financial difficulties due to the Coronavirus crisis.

For customers yet to request a payment freeze or an arranged interest-free overdraft of up to £500, the time to apply for one would be extended until the end of October. Similarly, firms would be expected to continue to offer their support for a further 3 months to customers who have already requested support but are still in financial difficulties.

The proposed new measures include:

  • Firms should contact their customers at the end of their payment freeze to find out if they can resume payments normally and, in that case, agree on a repayment plan for the missed payments. It is in the best interests of the clients to continue with their regular payments if they can do so.
  • Customers who are still facing financial difficulties due to Coronavirus should be entitled to reduced payments on their credit card and personal loans to an affordable lever for 3 months.
  • Negatively affected customers who have already taken up support in the form of an overdraft will be allowed to request up to £500 interest-free overdraft for further 3 months, and providing further support in the form of lower interest rates on borrowing above the interest-free buffer and repayment plans for those who would benefit from them.
  • The scheme will be extended for the benefit of later-impacted clients, who would still be allowed to request support until 31 October 2020.
  • Any payment freezes under this proposal should not have an impact on the customers’ credit files, but consumers should always consider that credit files are not the only source of information which lenders could use to assess creditworthiness.

Overall, firms are expected to take reasonable steps in assessing the needs of vulnerable customers and find possible ways to engage and support them.

The initial guidance announced in April included that firms should ensure all overdraft consumers were no worse off and not paying more than they would under previous prices. Whilst the FCA said that it was not proposing to expand this measure across the whole market, they highlighted that overdraft customers would be able to request a reduced interest rate on any additional borrowing in excess of £500.

The proposed rules are only applicable to credit cards and other retail revolving credit, such as store cards and catalogue credit, personal loans, and overdrafts.


How we can help: Should you need any guidance or assistance in dealing with matters relating to compliance with FCA or related regulatory matters in general, please contact:

  • Jonathan Greenstein

e-mail: phone: +44 (0) 20 7399 4132

  • Graham Levi-Samper

e-mail: phone: +44 (0) 20 7399 4991

  • Simon Chapman

e-mail: phone: +44 (0) 20 7399 4135

  • or your usual Complyport Consultant on +44 (0) 20 7399 4980