Consumers left in financial difficulty by the coronavirus crisis should be offered a three-month freeze on credit card and loan repayments under emergency plans by the City watchdog.
The Financial Conduct Authority (FCA) also said those affected who have overdrafts should see them charged at zero interest for three months.
Customers should not see their credit ratings affected if they have to use any of the temporary measures, the watchdog said.
The plans add to measures already announced by the government to support mortgage holders, renters, temporarily-laid off workers and the self-employed during the crisis – which has brought large parts of the economy to a standstill.
The FCA said they would provide a “short-term, temporary stop-gap” offering help for customers “who until now have been financially stable”.
It added that the guidance would not prevent lenders from offering more generous assistance – as some already were.
Christopher Woolard, the FCA’s interim chief executive, said: “Coronavirus has caused an unprecedented financial shock with far-reaching consequences for consumers in every corner of the UK.
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“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.”
Vim Maru, retail director at Lloyds Banking Group – which includes Lloyds Bank, Halifax and Bank of Scotland – said: “We welcome today’s guidance from the FCA and we continue to work closely with them through this unprecedented time.
“Since the start of the pandemic we have helped thousands of customers using the temporary support measures already introduced.”
Martin Lewis, founder of consumer website MoneySavingExpert.com, said the FCA move marked an unprecedented intervention from regulators and would end a “banking lottery” about what help customers could expect from lenders.
“Payment holidays mean exactly what they say – you don’t pay, but you can still be charged interest,” Mr Lewis added.
“And with interest rates often high, especially on cards, that can mean storing up trouble for future.
“Those struggling for cashflow may have no choice, but if you don’t need to do it, don’t.”
SOURCE : https://news.sky.com/story/coronavirus-credit-card-payment-freeze-under-emergency-plans-11967301