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By Sinead Cruise and Huw Jones
LONDON, April 2 (Reuters) - British consumers will receive a
three-month freeze on loan and credit card payments to weather
the coronavirus epidemic, under plans outlined by the country's
financial regulator on Thursday.
The "stop-gap" package complements relief measures already
announced by the government to support mortgage-holders,
furloughed staff, renters and the self-employed. It includes
pledges to slash interest rates on arranged overdrafts up to 500
pounds to zero, for up to three months.
The Financial Conduct Authority said it was conducting a
brief public consultation until next Monday, and the measures
would be expected to come into force by April 9. It will make a
further announcement about the measures next week.
"These measures would provide an expected minimum level of
financial support for consumers who until now have been
financially stable," FCA interim Chief Executive Christopher
Woolard said.
"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."
The guidance would not prevent companies from offering more
generous assistance to their customers, and some already are,
Woolard said.
The FCA, which supervises banks and credit providers across
Britain, also said consumers using any of these temporary
measures should not see their credit rating affected.
'BANKING LOTTERY'
The payment freeze on cards applies to credit, store and
catalogue cards, allowing customers to request a halt to all
payments for three months or to make a nominal payment. The
cards would not be suspended during the three-month period.
Customers without an overdraft on their main personal
current account are able to request one, the FCA added.
Lloyds Banking Group said it welcomed the FCA's guidance and
since the start of the pandemic it has helped thousands of
customers using the temporary support measures already
introduced.
Martin Lewis, founder of consumer champion
MoneySavingExpert.com, said it marked an unprecedented
intervention from regulators and would end a "banking lottery"
or hitherto patchy help from lenders for customers affected by
the pandemic.
"Payment holidays mean exactly what they say - you don’t
pay, but you can still be charged interest," Lewis said.
"And with interest rates often high, especially on cards,
that can mean storing up trouble for future. Those struggling
for cashflow may have no choice, but if you don’t need to do it,
don't."
(Reporting By Sinead Cruise and Huw Jones; Editing by Pravin
Char)
