Featured Product

    FCA Proposes Further Support to Borrowers Impacted by Pandemic

    November 04, 2020

    FCA proposed to enhance the measures for borrowers affected by COVID-19 after October 31, 2020. It proposed to extend payment deferrals and other support being provided to personal loans, credit cards, motor finance, rent-to-own, buy-now-pay-later, and pawnbroking customers who are experiencing payment difficulties. The proposals will mean that those who have not yet had a payment deferral will be eligible for two payment deferrals of up to six months in total and those who have availed an initial payment deferral will be eligible for a further payment deferral of up to three months. Borrowers would have until January 31, 2021 to request an initial payment deferral. FCA is asking for comments on the proposed measures by November 06, with the final guidance expected to be published as soon as possible after the comment period closes.

    High-cost, short-term credit consumers, such as those with payday loans, who have not yet had a payment deferral would be eligible for a payment deferral of one month. Consumer credit customers who have already benefitted from two payment deferrals (or one for HCSTC) and are still experiencing payment difficulties should speak to their lender who will be able to provide tailored support. This also applies to those who have resumed repayments after an initial payment deferral, as they would not be entitled to a further deferral, but should receive tailored support if they are experiencing payment difficulties. FCA is urging consumers not to contact their lender until the enhanced measures are in place. 

    A payment deferral under the FCA proposals would not be reported as missed payments on a borrower’s credit file. This does not mean that consumers’ ability to access credit will be unaffected in future, as lenders may take into account a range of information when making lending decisions. Tailored support may be reported on a borrower’s credit file and lenders should inform borrowers where this will be the case. FCA is working closely with trade bodies and lenders to ensure that the enhanced measures come into effect as soon as possible and the consumers receive the information they need. Firms will also continue to offer tailored support to overdraft borrowers, as set out in September 2020. This could include reducing or waiving interest, agreeing on a program of staged reductions in the overdraft limit and transferring the overdraft debt to an alternative credit product on more favorable terms. Premium finance consumers will continue to benefit from the tailored support announced on October 30, 2020. FCA will continue to keep the support available to consumers under review.

    FCA also finalized the guidance sets out measures to help customers who hold insurance and premium finance products and who continue to face financial difficulties because of COVID-19 crisis. The guidance, which was proposed in October 2020, sets expectations that firms provide tailored support to customers who have already had a payment deferral and those newly in financial difficulty due to changed circumstances relating to coronavirus. This guidance comes into force on November 01, 2020 and remains in force until varied or revoked. This guidance applies to regulated firms operating in the insurance and regulated credit premium finance markets, including insurers, insurance intermediaries, premium finance lenders that provide credit to fund the payment of insurance premiums in instalments, premium finance brokers that carry on regulated activities relating to credit granted for the purposes of financing insurance premiums in instalments, debt collectors, and other firms that may be involved in insurance arrangements and/or the provision of premium finance. The guidance also applies to all non-investment insurance contracts—that is, general insurance and protection contracts—while it does not apply to re-insurance products.


    Related Links

    Comment Due Date: November 06, 2020

    Keywords:  Europe, UK, Banking, Insurance, COVID-19, Payment Deferrals, Credit Risk, FCA

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582