Below is a summary of the key updates relating to Coronavirus over the past week. You can also read our guide on how to get help if you've been impacted financially by coronavirus, or chat to an adviser through our webchat from 8:30am-6pm Mon-Thurs, 8:30am-3:30pm Fri. 

New FCA measures in place

From this week, new temporary measures from the FCA will apply across a range of consumer credit products. These measures will be in place for up to three months and are designed to alleviate some of the financial pressure those affected financially by coronavirus may be experiencing.

It is important to note that while these measures are designed to provide relief during this uncertain time, interest will continue to build which can result in financial difficulty further down the line.

If you can afford to continue repayments, either in full or a smaller sum, FCA advice is to do so. Lenders may offer alternative temporary relief e.g. where a high rate of interest would accrue during the payment freeze period leading to longer-term financial difficulty.

Before entering into any of these measures, you should consider the following:

-Only do so if you need immediate and temporary financial relief

-If you can still afford to continue to make payments, even if they are of a smaller amount you should do so

-Don’t cancel or reduce payments until you have contacted your lender

 

Personal loans and credit cards

If you have a personal loan, credit card, store card or catalogue credit, you can ask for a freeze on repayments for 3 months. Personal loans also include guarantor loans, logbook loans and home collected credit.

What this means

You may be able to make no (or small token) payments for 3 months. 

This won’t affect your credit file for the period of the payment freeze. However, interest will continue to build during this period, meaning you pay higher costs in the longer term. 

If you can afford to keep up repayments, either in full or a smaller sum, then you should do so.

Your lender may offer you alternative temporary relief - for example, where a high rate of interest would accrue during the payment freeze period leading to longer-term financial difficulty.

You will be able to request help under these measures for a period of 3 months – and these will apply for a period of 3 months from when you agree them with your lender.

If you are still experiencing difficulty when the temporary measures come to an end

If you are not able to restart repayments at the end of this period, firms are expected to provide what is known as ‘forbearance’. This would include waiving the interest that has built up during the payment freeze period. 

Forbearance normally means arranging other ways to pay your debts, which could possibly include debt forgiveness. However, it’s important to know that this may affect your credit file and it could lead to your lender freezing access to your credit.

 

Overdrafts

If you have an arranged overdraft

You can ask the provider of your main current account for up to £500 of overdraft borrowing with no interest for 3 months.  Some providers have already announced they will provide interest-free overdraft facilities. To find out what your bank or building society is doing check their website.

If your current arranged overdraft is below £500

You will not pay any interest on the amount of your current overdraft limit. 

If you don’t have an overdraft, or your limit is smaller than £500

You can request a new overdraft or an increased limit. This will be subject to normal checks on affordability. 

If your current arranged overdraft limit is more than £500

Firms are only required to provide up to £500 interest free. 

When this applies

You will be able to request help for a period of 3 months – and these measures will apply for a period of 3 months from when you agree them with your lender. However, if a firm chooses to offer an interest free amount to all its arranged overdraft customers, then this may be offered for the same fixed period for all customers – and no less than 3 months.

If you have a basic bank account

This measure applies to personal current accounts, but not Basic Bank Accounts (that legally can’t have overdrafts), so contact your provider about what’s possible for you.

New overdraft rules

The FCA previously announced new rules meaning that firms can only charge a single annual interest rate for arranged and unarranged overdrafts, with no additional daily charges.

These new rules came into force on 6 April. However, over the next 3 months, firms will have to ensure that all consumers are not paying more than they would have paid compared to the prices charged before the changes came into force.

 

Other forms of credit

At the moment, these proposals don’t cover: 

• payday loans
• buy-now pay-later 
• motor finance on hire-purchase or leasing agreements

The FCA is looking at these areas, and other specialist types of lending, and is expected to announce specific proposals in due course.

If you’re already having difficulties

These changes are intended to provide short-term financial relief. If you have longer-term problems or are in other financial difficulty, other options may be more appropriate.

The FCA has stated that firms must help you if you’re having financial difficulties.

If you’re struggling to make your loan payments, firms should consider:

• suspending, reducing, waiving or cancelling any further interest or charges
• deferring payment of arrears
• accepting smaller payments for a reasonable period of time 

Make sure you contact your lender about what options are best for you.

When contacting your lender

Try and contact your lender online if possible. Call centres are very busy during the pandemic. If you need to use the telephone, please be patient.