The Financial Conduct Authority published draft guidance on 19 June 2020, for how firms should handle certain consumer credit customers who continue to face financial impact due to the coronavirus.
There was a window for comments on the proposals, which was open until 5pm on 22 June 2020; the finalised version of the guidance is expected imminently.
Importantly, the proposals are applicable only to types of ‘revolving credit’, such as credit cards, store cards, personal loans and catalogue credit cards. The guidance is not applicable to motor finance, ‘buy-now-pay-later’ or high-cost short-term credit (such as ‘payday loans’).
In April 2020, the FCA published guidance setting out the expectation for lenders to provide exceptional and immediate support to customers, for a temporary period only. Those measures, which have been in force since 27 April 2020, included an interest-free overdraft of up to £500 for 3 months, a 3-month payment freeze on motor finance, personal loan, credit and store card agreements, and a 1-month freeze for high-cost short-term lending.
Now, the FCA proposes to exercise its powers to amend the Consumer Credit Sourcebook, pursuant to sections 137A and 137T of the Financial Services and Markets Act 2000, via implementing the Covid-19 Credit Cards and Personal Loans (No 2) Instrument 2020.
Amongst the new proposals, the FCA recommends that firms allow customers the opportunity to request a payment freeze, or £500 interest-free overdraft, any time up until 31 October 2020. Whilst the position remains that customers should continue to make payments where they can afford to do so, lenders are expected to offer assistance to customers who face ‘temporary financial difficulty’, which echoes the phrasing from the leading case on time orders, Southern v District Finance Plc v Barnes  3 WLUK 321.
The FCA stressed that they created the proposals in conjunction with debt charities, lenders and other financial authorities. There is provision within the guidance for the treatment of vulnerable customers – in particular, the need to draw to customers’ attention the types of assistance which are available to them. Firms are expected to encourage customers to access these resources to obtain help and further guidance.