Tag: FCA

FCA confirms temporary financial relief for customers impacted by coronavirus

The Financial Conduct Authority (FCA) has today confirmed a package of targeted temporary measures to help people with some of the most commonly used consumer credit products. 

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

Christopher Woolard, interim Chief Executive at the FCA, said: ‘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.’

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
  • 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.

Consumers should check firm websites or social media posts for more information, and where possible use online services to request assistance.

This will reduce the pressure on firm call centres who are experiencing a high demand in calls due to the current pandemic situation. If consumers need to get in touch by telephone please be patient and, if you can, wait until after the Easter weekend, 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.

The FCA will keep this guidance under review.

Which? urges clarity on financial help for bank customers

Which? is calling on the financial regulator to urgently provide greater clarity on temporary measures to help people struggling financially because of coronavirus, as new research reveals the huge toll the outbreak is expected to take on people’s finances.

A survey by the consumer champion carried out between 20-22 March, just before the government asked people to stay at home to stop the spread of coronavirus, highlights that significant numbers of people are expecting to struggle with their finances over the next year.

With the Financial Conduct Authority (FCA) set to introduce temporary measures tomorrow designed to help consumers falling into financial difficulty as a result of the crisis, Which? can reveal people of all levels of working status are now expecting their household finances to worsen over the next 12 months, with those who work part time reporting the highest level of concern.

Taking the proportion of people expecting their financial situation to get better and subtracting the proportion who expects it to get worse, confidence among part-time workers was at -56 percentage points. The figure stands at -36 for those in full time work.

Of those that are retired, confidence in the future of their household finances stood at -49 for those on a state pension only and -45 for those with a private pension.

The research also shows that consumer confidence in the economy has plummeted. When asked whether the economy would be better or worse in 12 months’ time, confidence fell from -17 in February to -78 in March.

Worryingly, the financial impact of coronavirus follows a period in which large numbers of people were already reporting having cut back on spending, with 39 per cent of consumers in 2019 reporting that they reduced spending on essential items or took money from savings to cover their spending.

This indicates that a significant number of people may have already been close to the point of relying on credit to help manage their personal finances, and the impact of coronavirus could have pushed them to the point where they now need to depend on existing credit cards, loans or overdrafts.

Measures proposed by the FCA last week, due to come into force on Thursday, are designed to provide a temporary solution for consumers who until now have been financially stable. These include a temporary payment freeze on loans and credit cards as well as zero interest on existing overdrafts up to £500, with both put in place for three months.

However, while Which? is generally supportive of the plans, reassurance is needed that the measures can be consistently applied for customers across all banks, and that customers who take up these options will be fully aware of any longer term implications of using them.

This requires the FCA to be as explicit as possible about precisely when the payment holiday period starts – whether it is from the proposed launch date of 9 April, or from the moment the consumer requests support at any point during those three months.

There also needs to be a clear, industry-wide exit strategy for the temporary measures, which must ensure that customers do not end up in unnecessary financial hardship.

There is particular concern about how consumers will be moved off of their £500 interest free overdrafts after three months.

The consumer champion says it is vital that banks do not immediately place consumers back to their original arranged overdraft and rates at the end of any holiday period, and the FCA should consider  “easing off” interest-free overdraft arrangements in a way that does not affect credit scores.

The consumer champion believes that greater transparency will make it easier for people to access services online and make it clear that only those in the most urgent need should seek to directly contact their financial institutions. This should reduce the burden on call centres, providing a greater chance of consumers getting the help they need in good time.

Gareth Shaw, Head of Money at Which?, said: “The impact of the coronavirus outbreak is going to cause a sharp shock to huge numbers of people across the country, and many who were previously in good financial health will now require help from their banks to see them through the coming months.

“While the FCA has taken positive steps to provide assistance, there needs to be urgent clarity so that banks can apply this support consistently for everybody who is eligible, and customers can decide whether these measures represent the best option available to them.”

Insurance: customers paying the price for loyalty … or laziness?

Savings to be made by shopping around

The Financial Conduct Authority (FCA) has published the interim report of its market study into the pricing of home and motor insurance. The FCA found that competition is not working well for all consumers in these markets. It sets out concerns about how pricing in these markets leads to consumers who do not switch or negotiate with their provider paying high prices for their insurance.

Continue reading Insurance: customers paying the price for loyalty … or laziness?

PPI deadline is looming: don’t be ‘too busy’ to claim, says FCA

“I’m busy is the new I’m fine” – consumers in Edinburgh given help to prioritise, with two months to go to the PPI deadline

  • 70% people in Edinburgh are likely to reference how busy they are when asked ‘How are you?’ 
  • FCA teams up with productivity expert, Clare Evans to help people take a step back and tackle their task lists – such as claiming for PPI
  • FCA releases latest figures on PPI

With two months to go to the PPI deadline (29th August 2019), the Financial Conduct Authority (FCA) is releasing new research and tips to help urge consumers to make a decision and prioritise action, so they can meet deadlines and free themselves from being ‘too busy’.  Continue reading PPI deadline is looming: don’t be ‘too busy’ to claim, says FCA