To alleviate financial hardship caused by the coronavirus (Covid-19) outbreak, the UK’s Financial Conduct Authority (FCA) has restrained banks from cancelling customers’ credit cards until October.
The regulator has advised banks to give borrowers additional time to start repaying their debts.
The banking watchdog on its website wrote, “In the current climate, we want firms to show greater flexibility to customers in persistent credit card debt.”
As per the existing guidelines, credit firms are required to take a series of escalating steps to enable clients who are making low repayments over a long period.
The credit provider must offer borrowers options after 36 months if somebody remains in debt, to help repay the debt more quickly. The card must be suspended if the client fails to respond within a timeframe set by the firm.
Given the challenges customers are currently facing, they should be given more time to respond to firms’ communications, the FCA said.
Following this advisory, credit firms would not be obliged by the FCA’s rules to cancel the cards of non-responders before 1 October this year.
This will be applicable both to clients who have already received communications from their credit provider and those who have yet not received.
This is part of issued detailed guidelines the FCA has issued to financial services firms in response to the quickly-spreading coronavirus (Covid-19) outbreak.
The regulator has asked financial institutions to offer customers increased flexibility across both secured and unsecured debt.
FCA said that it is closely monitoring the coronavirus situation.
“We expect firms to provide strong support and service to customers during this period. They should be clear and transparent and provide support as consumers and small businesses face challenges at this time,” the regulator said in its press statement.
“We also expect firms to manage their financial resilience and actively manage their liquidity. Firms should report to us immediately if they believe they will be in difficulty.”
Recently, mortgage lenders across the UK have announced plans to allow people affected by the coronavirus outbreak to defer mortgage and loan repayments.
Several UK banks have decided to offer loan repayment holiday to support homeowners affected by the coronavirus.
As more customers are seeking ways to avoid public places amid the coronavirus pandemic, banks are increasingly encouraging the use of their online and mobile banking.
Here is the definitive timeline exploring coronavirus (Covid-19) from its initial outbreak to today, taking a precise look at its effects on financial services.