The Financial Conduct Authority has unveiled a range of temporary measures that will affect financial firms, coming into force by 9 April.
The FCA expects firms to offer a temporary payment freeze on loans and credit cards where consumers face difficulties with their finances as a result of coronavirus, for up to three months.
Customers who have been hit financially and already have an arranged overdraft on their main personal current account should be charged no interest on up to £500 for up to three months.
Meanwhile people’s credit ratings shouldn’t be affected by any of the temporary measures.
Christopher Woolard, interim chief executive of the FCA, said: “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.”
“If confirmed, these measures will provide a short-term, temporary stop-gap, for a period of up to three months.
“These measures would provide an expected minimum level of financial support for consumers who until now have been financially stable. They are not a substitute for our normal forbearance where that would be more suitable for a consumer in serious and immediate financial difficulty.
“Where consumers can still afford to make payments, they should as normal and this is likely to be in their best long-term interest to continue to do so.
“Lenders do not have to put these measures in place until they come into force. It may take a short period of time for lenders to put in place arrangements to provide these measures.
“Consumers should not contact their lender yet unless their lender is already offering voluntary assistance. The FCA expects to make a further announcement about these measures next week.”
Companies have until 9am on 6 April to respond to the proposals.
Stephen Jones, chief executive of UK Finance, said: “All lenders are ready to support their customers during this unprecedented situation, with many individual firms already helping with relief on overdrafts and other unsecured debts.
“We have been talking with the regulators about the need to change the rules to enable lenders to provide further help for their customers, where it is needed most. The proposed changes to the FCA’s rules should enable lenders to deliver further support to their customers and we will continue to work with the regulator as part of the industry’s commitment to get the country through these difficult times.
“Lenders want to ensure that customers are both helped with their current financial circumstances and able to manage their borrowing when the crisis has passed. It is critical that the FCA’s proposals do not disrupt the provision of credit to borrowers and takes account of the business models of all credit providers including those outside the mainstream market.
“Firms have been taking a record volume of calls due to Covid-19 while facing the same pressures on staffing as the rest of the country. Where possible we would therefore encourage customers to check their lender’s website first to see if it answers their question, and consider getting in touch via online chat, social media and online banking and mobile apps.”
This post has originally been featured in Property Wire.