COVID 19: Help with credit cards and overdrafts

Financial Conduct Authority (FCA) confirms temporary financial relief for customers impacted by the coronavirus

Banks and building societies who are implementing the changes from today are – HSBC, Lloyds, RBS, Barclays, Santander and Nationwide.

The Financial Conduct Authority (FCA) confirmed a package of targeted temporary measures to help people with their credit.

Following a short consultation, the FCA will be going ahead with the proposals outlined last week. Giving firms the flexibility to provide temporary financial relief to those facing payment difficulties during the coronavirus (COVID-19) pandemic.

Temporary measures will:

  • offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by the coronavirus
  • allow customers who are negatively impacted by coronavirus and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months
  • make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force
  • ensure consumers using any of these temporary payment freeze measures will not have their credit file affected

The rule changes will be in force from today and the full range of measures will apply by Tuesday 14 April 2020.

This is to allow firms time to ensure they have the appropriate level of resources available to handle customer requests. All firms will be ready to receive customer requests by 14 April. Although some firms including the major banks and building societies will be adopting the changes today.

Check your bank or credit card’s websites or social media posts for more information.  Call centres are experiencing high demand in calls due to the current pandemic situation to be warned. If consumers need to get in touch by telephone please be patient. If you can wait until after the Easter weekend to ring. Even if your lender is offering help sooner than the 14 April 2020.

In response to the consultation, the guidance now includes clarification on which products are in scope.

In particular, the FCA are confirming that the following products are covered: guarantor loans, logbook loans, home collected credit, a loan issued by Community Development Finance Institution and some loans issued by credit unions, but only where these are regulated. The guidance also applies to firms which have acquired such loans.

These measures won’t replace normal forbearance rules where these would be more suitable for a consumer in serious and immediate financial difficulty.

Consumers in financial difficulty should contact the Money Advice Service (MAS) for further guidance.

Coronavirus – more help for people with debts

Top money blogger Debt Camel discusses this in more detail. Looking at what to do if you have bigger debts such as care finance, payday loans and Universal Credit advances.

If you are struggling and are unable to pay any debt. Now is the time to get in touch with banks, credit companies and ask for help. Measures have been designed to be put in place to help you. However, you still need to make these arrangements with any debtors you may have.

What the FCA says:

‘We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic. The measures we’ve announced are designed to provide people affected with short-term financial support through what could be a very difficult time. The changes will provide support for consumers with credit cards, loans and overdrafts, facing temporary financial difficulties because of the pandemic.

‘Customers should think carefully before making use of these measures and only do so if they need immediate help. Where they can still afford to make payments, they should continue to do so.

‘We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week.’

Christopher Woolard, interim Chief Executive at the FCA,

The FCA will keep this guidance under review.