The financial regulator is consulting on new proposals to help customers during the coronavirus pandemic
People struggling financially due to the coronavirus crisis will get more support from banks under new plans from the Financial Conduct Authority (FCA).
The financial watchdog is urging banks to put the following emergency measures into place:
- A three-month repayment freeze on loans
- A three-month freeze on credit card and store card debt
- 0% interest for three months on agreed overdrafts of up to £500
- Credit score protection for customers who use these measures
A short consultation is being held on these proposals this week, and, if approved, banks will have to implement them by 9 April.
Some banks have already started to waive overdraft fees to support customers facing financial difficulty during the coronavirus pandemic.
Experts warn that despite these efforts vulnerable customers could still face money troubles.
Gillian Guy, chief executive of Citizens Advice, says: "These proposals offer a welcome short-term reprieve for many of those suddenly facing the immediate financial shock of coronavirus.
“But the debt will still be there waiting for borrowers at the end of these three months, and could suddenly have a high interest rate piled on top of it. Another major concern is that these protections don’t seem to cover the most vulnerable borrowers, such as those with payday loans."
The FCA will make a further announcement about its proposals next week.
Christopher Woolard, interim chief executive at the FCA says: “Coronavirus has caused an unprecedented financial shock with far-reaching consequences for consumers in every corner of the UK.
“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.”