The FCA has published a package of temporary relief proposals for those using overdrafts, credit cards or other types of personal debt, in response to the coronavirus crisis, here. It intends the measures to come into force on April 9.
Becky O’Connor, personal finance specialist at Royal London, said: “These proposals will help to prevent millions of borrowers being unfairly penalised through the emergency use of debt during this difficult time.
“The measures will compel a greater generosity than might have been offered if lenders were left to their own devices.
“By standardising the help available, this levels the playing field and offers the same level of fairness for all who find themselves suddenly and unavoidably dependent on debt.
“It means that borrowers don’t have to worry so much about scrabbling around to find better overdraft or credit card rates, on top of everything else they are dealing with.”
The FCA has laid out proposals that:
- Set out the FCA’s expectations on firms to offer a temporary payment freeze on loans and credit cards where consumers face difficulties with their finances as a result of coronavirus, for up to three months.
- Ensure that for customers who have been hit financially by the coronavirus and already have an arranged overdraft on their main personal current account, up to £500 will be charged at zero interest for up to three months.
- Require firms to make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft changes came into force.
- Ensure consumers using any of these temporary measures should not have their credit rating affected because of this.
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About Royal London
Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £130 billion, 8.8 million policies in force and 4,046 employees. Figures quoted are as at June 2019.
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