City watchdog tells UK lenders to help hard-up consumers hit by coronavirus
The City watchdog on Thursday demanded lenders give hard-up consumers a break with a package of temporary measures to help them get through the virus crisis.
The Financial Conduct Authority proposed a temporary freeze on the payment of loans and credit cards where consumers face hardship as a result of the outbreak in a series of “stop-gap” measures to be introduced next week.
The watchdog also asked that customers who already have an arranged overdraft on their main personal current account be allowed up to £500 extra breathing space with no interest for up to three months.
In January, the regulator moved to ensure overdraft fees were capped at a single annual interest rate to reduce the cost of unarranged borrowing. Today it demanded lenders ensure customers are no worse off than before these measures officially came into force yesterday.
Customers’ credit rating should not be impacted by using any of the temporary measures, it added.
The package represents the latest move to try to keep small businesses and families afloat as incomes dry up. It comes on top of three-month mortgage holidays and support for furloughed employees and the self-employed.
The FCA launched a swift consultation on the support package, to be concluded on Monday. Christopher Woolard, interim chief executive of the FCA, said: “If confirmed, this package of measures will help provide affected consumers with the temporary financial support they need.”
Lloyds retail director Vim Maru said: “We welcome today’s guidance from the FCA and we continue to work closely with them through this unprecedented time.”
The High Street bank pre-empted the FCA move to offer credit card holidays and interest-free overdrafts up to £300.
Britain’s biggest banks have come under fire for struggling to funnel through £330 billion of loans for businesses announced by Chancellor Rishi Sunak two weeks ago.
Business owners have faced jammed phone lines and red tape — such as initially having to put up their personal assets as guarantees —slowing up the process.
Insiders point out the scheme was introduced rapidly and banks have been inundated. But the backlog threatens to further damage banks’ reputation.
Richard Burge, chief executive of the London Chamber of Commerce, said: “The Government money simply isn’t flowing fast enough down the chain."
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