Credit help plan for struggling customers

Further support measures to help overdraft, credit card and personal loan customers struggling with finances due to COVID-19 have been proposed by the City regulator.

Current support measures, which include the option of payment holidays, are set to expire next month, but the Financial Conduct Authority is proposing lenders giving extra support to those who continue to need help.

Under the proposals, lenders will need to contact overdraft customers who have received temporary support to find out if they still need help.

If further support is needed, firms should look at reducing or waiving interest, agreeing staged reductions in overdraft limits and supp o r t i n g c u s to m e r s to re - duce their overdraft usage by transferring the debt. It says it expects firms to work with customers approaching the end of a payment holiday to provide support before they miss payments.

The FCA also said customers should not be pressured into paying off debts within an unreasonably short period and the needs of vulnerable customers should be recognised.

The proposals will also cover users of some other types of credit such as store cards, catalogue credit, motor finance, buy-now pay-later (BNPL), rent-to-own (RTO), pawnbroking and high-cost short-term credit.

Christopher Woolard, interim chief executive at the FCA, 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."

The regulator wants feedback f ro m l e n d e r s o n the draft guidance by September 21.