Credit card loans and time off will be extended for 6 months in the middle of the second lockdown
The new emergency measures will include payment interruptions of up to six months on loans, credit cards, auto financing, lease with purchase option, buy it now, pay later, high cost pawn shop and short term credit.
Millions of struggling households will be able to request additional support for their loans and debt repayments following the latest coronavirus foreclosure measures, the Financial Conduct Authority has announced.
This will include interruptions in payments on loans, credit cards, auto financing, lease purchase, buy it now, pay later, pawn shops and high cost short term credit. , said the regulator.
In a statement released on Monday, the FCA said it was in talks to expand support measures to those who will be affected by the latest restrictions.
It will be followed by new measures for those struggling to cope with mortgage payments later Monday.
It comes as Boris Johnson announced a new nationwide lockdown – which will include the forced shutdown of all non-essential stores and businesses from 12:01 am Thursday.
The government’s leave program – which was slated to end on Oct. 31 – will also be extended.
The FCA said the proposals will include allowing those who have not yet requested a payment holiday to apply for one.
That could be up to six months – while those with debt to buy now and pay later will be able to request a leave of up to six months.
However, he cautioned that this should only be applied in cases where customers are unable to make repayments, as interest will continue to accrue despite the so-called break-up.
“To support those who are financially affected by the coronavirus, we will propose that consumer credit customers who have not yet had a payment deferral according to our July guidelines can request one,” a statement said.
“This could last up to 6 months, unless it is clearly not in the best interests of the client. Under our proposals, borrowers who currently have a first deferral of payment in accordance with our July guidelines could apply for a second postponement.
“For high-cost short-term credits (like payday loans), consumers might ask for a one-month deferral if they haven’t already had one.
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“We will be working with commercial organizations and lenders on how to implement these proposals as quickly as possible, and will make another announcement shortly.
“In the meantime, consumer credit clients should not yet contact their lender. Lenders will shortly provide information on what this means for their clients and how to request that support if our proposals are upheld.”
Anyone struggling to pay their bills should speak to their lender to discuss tailored support, the FCA said.
This could include a payment plan or a total suspension of payments.
The FCA is also proposing to extend mortgage holidays for homeowners.
He is expected to announce a new six-month extension on Monday, which would include newly struggling households and those already on mortgage break.
“Mortgage borrowers who have already benefited from a 6-month deferral of payment and who are still encountering payment difficulties should contact their lender to agree on tailor-made support,” said a press release.
Eric Leenders, of UK Finance, which oversees the banking industry, said anyone affected should not yet contact their bank or mortgage company.
“Lenders are providing unprecedented levels of support to help clients navigate the Covid-19 crisis and stand ready to provide ongoing assistance to those in need.
“The industry is working closely with the Financial Conduct Authority to ensure that customers affected by the new foreclosure measures announced tonight will be able to access the most appropriate support.
“Customers who want to access this support do not yet need to contact their lenders. Lenders will provide information after November 2 on how to request this support. “