Featured Product

    FCA Finalizes Further Guidance to Support Customers Affected by Crisis

    October 02, 2020

    FCA finalized additional guidance for firms in relation to the consumer credit products and overdrafts, with the guidance becoming effective on October 02, 2020. The guidance intends to ensure that firms provide tailored support for users of certain consumer credit and overdraft products who continue to face payment difficulties due to COVID-19 pandemic. The guidance covers users of credit cards and other revolving credit (store card and catalogue credit), personal loans, motor finance, buy-now pay-later, rent-to-own, pawnbroking, and high-cost, short-term credit products and overdrafts. FCA also published a statement (FS20/15) that summarizes the feedback received to this additional guidance that was proposed in September 2020.

    The guidance applies both to consumers who have benefited from support under the current guidance and continue to face financial difficulties as well as to customers whose financial situation may be newly affected by COVID-19, after the current guidance ends on October 31, 2020. FCA expects firms to:

    • Recognize the uncertainties and challenges that many customers will face in the coming months as the crisis develops and provide tailored support, which reflects their individual circumstances
    • Be flexible and employ a full range of shorter and longer-term options to support their customers and minimize stress and anxiety experienced by customers in financial difficulty
    • Give customers time and opportunity to repay and do not pressurize them into repaying their debt within an unreasonably short period of time
    • Put in place sustainable repayment arrangements which are affordable and take account of their customers’ wider financial situation including their other debts and essential living expenses
    • Prevent customer balances from escalating once they have put in place a repayment arrangement by suspending, reducing, waiving or cancelling any interest, fees or charges necessary to make that happen
    • Recognize and respond to the needs of vulnerable customers

    FCA will monitor how firms apply the guidance to ensure borrowers are treated fairly, with regard to their individual circumstances. Customers should be given time to consider their options and to seek debt advice (if necessary) before deciding on the support they take. Additionally, FCA has confirmed that it expects firms to contact overdraft customers who have received temporary support to determine if they still require assistance. Where a customer needs further support or where a newly affected customer gets in touch asking for help, firms should provide tailored support such as reducing or waiving interest, agreeing a program of staged reductions in the overdraft limit, or supporting customers to reduce their overdraft usage by transferring the debt. The guidance sets out when these options may be appropriate. The guidance will be kept under review and if circumstances change significantly, consideration will be given to any further measures that may be needed to support consumers during the ongoing pandemic. FCA will also review this guidance within six months of it coming into effect to determine whether it remains relevant given the coronavirus crisis or whether it needs to be amended, withdrawn, or replaced.

     

    Related Links

    Effective Date: October 02, 2020

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

    Featured Experts
    Related Articles
    News

    Regulators Fine Goldman Sachs for Risk Management Failures

    FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).

    October 23, 2020 WebPage Regulatory News
    News

    Canada Hosts International Conference of Banking Supervisors

    BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.

    October 22, 2020 WebPage Regulatory News
    News

    FCA Proposes More Measures to Help Insurance Customers Amid Crisis

    FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.

    October 21, 2020 WebPage Regulatory News
    News

    EBA Issues Opinion to Address Risk Stemming from Legacy Instruments

    EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.

    October 21, 2020 WebPage Regulatory News
    News

    ESRB Publishes Non-Bank Financial Intermediation Risk Monitor for 2020

    ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).

    October 21, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Policy Statement Amending Benchmarks Regulation

    HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.

    October 21, 2020 WebPage Regulatory News
    News

    APRA Initiates Action Against a Bank for Liquidity Compliance Breach

    APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.

    October 21, 2020 WebPage Regulatory News
    News

    PRA Consults on Implementation of Certain Provisions of CRD5 and CRR2

    PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).

    October 20, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Rule to Reduce Impact of Large Bank Failures

    US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).

    October 20, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Rule on Net Stable Funding Ratio Requirements

    US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations.

    October 20, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6004