Banks and card issuers commit to ongoing support for consumer credit customers

Thursday, 19 November 2020 19:09

Banks and card issuers will extend the provision of credit card and personal loan payment deferrals of up to a maximum of six months until 31 July 2021. Consumers have until 31 March to apply for a new payment deferral or extend an existing payment deferral Consumers who have had a full six-month payment deferral but continue to experience financial difficulty are encouraged to contact their lender to discuss tailored support The industry has so...Request free trial

Banks and card issuers will extend the provision of credit card and personal loan payment deferrals of up to a maximum of six months until 31 July 2021.
Consumers have until 31 March to apply for a new payment deferral or extend an existing payment deferral
Consumers who have had a full six-month payment deferral but continue to experience financial difficulty are encouraged to contact their lender to discuss tailored support
The industry has so far granted 1.16 million payment deferrals on credit cards and over 814,000 payment deferrals on personal loans.

The banking and finance industry has committed to renewed support for consumer credit customers facing financial difficulty as a result of the Covid-19 pandemic, as the Financial Conduct Authority (FCA) announces guidance which will come into effect on 25 November.

A total of 1.16 million payment deferrals on credit cards have been granted to customers with over 64,000 still in place, and over 814,000 payment deferrals on personal loans have so far been granted with over 31,000 still in place. Of those credit card and personal loan customers whose payment deferral has come to an end, evolving industry analysis suggests that three-quarters have now returned to making repayments.

The application window for customers to apply for a new payment deferral or to extend their payment deferral up to a maximum of six months in total has been extended until 31 March 2021. Customers on a payment deferral at 31 March 2021 are able to apply to extend their deferral for up to a further three months if they have not already taken the full six-month deferral. All deferrals will be completed by 31 July 2021 at the latest.

Consumers who have already had six months of payment deferrals or are receiving tailored support, will not be eligible for a further payment deferral under this scheme. For customers who are not eligible for a deferral, including if the lender believes a deferral is not in the customer’s interest, tailored support will be available.

Eric Leenders, Managing Director of Personal Finance at UK Finance, said:

“Lenders continue to provide unprecedented support to borrowers impacted by the Covid-19 crisis. We are supportive of the FCA’s guidance and continue to work through the detail to ensure customers continue to receive the help they need.

“It will always be in the long-term interest of customers who are able to do so to resume making payments, but for anyone who is still struggling ongoing support will be available. This could include the option of further payment deferrals on credit cards and personal loans in some circumstances or providing more tailored support where appropriate.”

For customers who are struggling with the cost of their overdrafts as a result of coronavirus, support will be available. This could include reducing or waiving interest.

It will always be in the best interest of customers to resume making credit card or personal loan repayments if they are able to do so. However, for those customers who have already taken a total of six months of payment deferrals and continue to need support, all lenders will offer tailored options, taking in to account their personal circumstances including any local Covid-19 restrictions that may be imposed. Firms will not report payment deferrals as a worsening status to credit files under the guidance.

Notes to editors

The industry has put in place a clear plan to help Britain through the Covid-19 crisis:

Two and a half million mortgage payment deferrals
27 million interest-free overdrafts offered
1.16 million payment deferrals on credit cards and over 814,000 payment deferrals on personal loans
£57.3 billion of lending to over 1.4 million businesses through government Covid-19 lending schemes
Protecting customers from scams and fraud
Higher limit for contactless payments

For those customers who have already taken a total of six months of payment deferrals and continue to need support, all lenders will offer tailored options , taking into account their personal circumstances including any local restrictions that may be imposed. Support will be available both for those who have previously taken a payment deferral and those who are newly in financial difficulty.

Ongoing support for credit card and personal loan customers may include:

Accepting reduced payments for a further short period if the customer’s circumstances are expected to improve.
Accepting reduced payments via a longer-term repayment plan if the customer is experiencing more severe financial difficulties.
Considering whether the refinancing of the outstanding credit at a sustainably affordable payment rate is an option which will be in the customer’s interests.