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FCA proposal for temporary financial relief (including credit cards) for those impacted by Coronavirus

6 Ebrill 2020

FCA proposal for temporary financial relief  (including credit cards) for those impacted by Coronavirus [ 130 kb]


  1. The FCA should consider further measures including the freezing of interest during the payment holiday for those in financial difficulty. 

  2. The FCA should provide clarity on whether the proposed 0% interest rate on up to £500 arranged overdrafts will also apply to unarranged overdrafts.

  3. Customers who are digitally excluded and traditionally relied on accessing banking services through their branch may struggle to get in touch with their bank or lender. These customers should be treated fairly, for example provided with a payment holiday or interest free overdraft if there are indicators of financial difficulty.

  4. The FCA should extend the payment holiday proposals to include motor finance agreements and ensure customers are protected from repossession of vehicles.

  5. The FCA needs to clarify the expectations on guarantor lending firms in relation to the fair treatment of guarantors who are impacted by coronavirus.

  6. The FCA may well need to extend its measures beyond a 3 month period  to ensure all customers are protected until they can get their finances back on track.

The financial relief proposals and guidance set out by the FCA offer a welcome short-term reprieve for many of those suddenly facing the immediate financial shock of coronavirus.However, we feel in a number of areas, there is a need for greater clarity on what these changes will mean in practice.

Those who are already in debt are likely to see financial strain worsen as a result of COVID-19. This is due to falling incomes and rising expenditure on essentials like energy. These issues will be particularly acute for those with caring responsibilities, people who have recently lost their jobs or faced workplace closure and those who have had to self-isolate due to vulnerability. Compared to the general population, people who come to Citizens Advice for help with debt are 2 times as likely to be disabled or have a long term health condition (37% compared to 18%). They are also more likely to be women (58% vs 51%).

38% of Citizens Advice debt clients already have a negative budget. This means they don’t have enough money to cover ongoing essential expenditure or debt repayments. The demographic trends among these people broadly reflect those for debt clients, but are more pronounced - 60% are women and 53% are disabled. Again, these people are particularly likely to be vulnerable due to needing to self-isolate.

While the proposed measures are a positive step forward in helping those who are struggling financially in this unprecedented time, the debt will still be there at the end of the 3 month period with borrowers facing higher repayments due to the interest added onto people’s debts.