Banks told to extend support for struggling borrowers by another

Banks and credit providers have been told to extend payment holidays and support for customers in financial trouble due to the impact of coronavirus by another three months.

UK regulator, the Financial Conduct Authority (FCA), said it expects those on support or experiencing temporary difficulties to continue to receive deferrals or a reduction in payments to levels they can afford.

The window for borrowers to apply for a payment freeze or an arranged interest-free £500 overdraft has also been extended until the end of October.

Christopher Woolard, interim chief executive at the FCA, said: ‘We have been working closely with other authorities, lenders and debt charities to support consumers in the current emergency. The proposals we’ve announced today would provide an expected minimum level of financial support for consumers who remain in, or enter, temporary financial difficulty due to coronavirus.”

The FCA also wants lenders to agree a payment plan when the freeze period ends to work out how best to make up the missed payments.

The regulator said that temporary support measures should also not be counted against a customer’s credit rating, while special consideration should be given to the needs of vulnerable customers.   

The guidelines are expected to come in force shortly after June 22, 2020.