Payment holidays were first introduced by the government in March to offer an olive branch to those struggling financially. However, the effects of COVID-19 have been unfortunately been long-lasting, with many still finding it difficult to return to life as normal. In fact, reports of Britons pushed into debt have increased recently as many reckon with the ongoing crisis.
As a result, the Financial Conduct Authority (FCA) has provided further guidance which is likely to help those who are reaching the end of a payment holiday.
This draft guidance specifically relates to credit and overdrafts, and so is likely to help individuals who may be juggling keeping out of debt as well as regular bills.
If the measures are confirmed, the FCA would expect firms to offer a helping hand to Britons in a number of ways.
Firstly, those who are approaching the end of a payment holiday should be provided with additional support before they miss payments.
But payment holidays, as valued as they have been, will come to a close.
Under rules laid out, rights to a credit card, overdraft or loan payment freeze is scheduled to end on October 31.
Christopher Woolard, the interim chief executive of the FCA, commented on the new proposals.
He said: “Our proposals are designed to help people who have been facing payment difficulties because of the pandemic get back on track with tailored support from firms.
“For those who can restart payments, it is in their best interests to do so.”
Mr Lane said: “The FCA has recognised the unique circumstances that continue to face people whose finances have been negatively affected by the pandemic, but the effect may still be to leave them at a serious financial disadvantage through no fault of their own.
“While we welcome the broad thrust of this new guidance, we have concerns that it leaves open the risk of different lenders adopting very different approaches, leaving customers caught in something of a lender lottery in terms of how their ongoing problems may be managed.
“We need to understand how lenders will implement the guidance in practice, but we welcome the strong signposting to debt advice that the FCA flags as an appropriate measure that lenders should put in place.
“With over four million people having built up significant debt as a result of the pandemic, we see it as vital that people shouldn’t be put in a situation where they experience long term financial difficulty or exclusion as a result of measures taken to control the virus.
“Government support needs to complement regulatory action to achieve this.”