Recent regulatory developments of interest to financial institutions.
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- COVID-19: FCA FS20/3 confirms temporary financial relief for consumer credit customers
Following a seasonal break, the next update will be published on 27 April 2020.
COVID-19: FCA FS20/3 confirms temporary financial relief for consumer credit customers
The Financial Conduct Authority (FCA) has published its final rules and guidance, FS20/3, confirming a package of targeted temporary measures to help people with some of the most commonly used consumer credit products.
Following a short consultation, reported in our briefing, COVID-19: FCA consumer credit temporary relief proposals, the FCA confirms it will go ahead with its proposals.
The measures include firms being expected to:
- offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by 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; and
- ensure consumers using any of these temporary payment freeze measures will not have their credit file affected.
The rule changes are in force from 9 April 2020 and the guidance comes into effect from 14 April 2020. This allows 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 will adopt the changes earlier.
In response to the consultation, the guidance now includes clarification on which products are in scope. In particular, the FCA confirms 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 do not 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 for further guidance.
The FCA will keep this guidance under review.
The FCA has published the following related webpages:
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