FCA Proposes Guidance to Further Support Consumer Credit Customers
FCA announced proposals that would provide continued support for certain consumer credit products to users, who are facing a financial impact because of the exceptional circumstances arising from the COVID-19 pandemic. The proposed guidance outlines the support that financial firms would be expected to provide to motor finance, credit card and other revolving credit (store card and catalog credit), and personal loan customers, whose loans are coming to an end of a payment freeze and for those who are yet to request one. For customers yet to request a payment freeze or an arranged interest-free overdraft of up to GBP 500, the time to apply for one would be extended until October 31, 2020. The comment period for the proposed guidance with respect to motor finance and high-cost credit products ends on July 06, 2020 while the comment period for the proposed guidance on credit cards, overdrafts, and personal loans ends on June 22, 2020. FCA expects to finalize the guidance shortly afterward.
The guidance applies to credit cards and other retail revolving credit, such as store cards and catalog credit, personal loans, and overdrafts. The proposals stipulate that, at the end of a payment freeze, firms should contact their customers to find out if they can resume payments, and if so, agree a plan on how the missed payments could be repaid. Where a customer needs further temporary support to bridge the crisis, any payment freezes or partial payment freezes offered under this guidance should not have a negative impact on credit files. However, consumers should remember that credit files are not the only source of information that lenders can use to assess creditworthiness. The proposed guidance also stipulates that anyone who continues to need help gets help; for customers still facing temporary payment difficulties as a result of COVID, firms should provide them with support by reducing payments on their credit card and personal loans to a level they can afford for three months
The proposals also include support for overdraft customers. This means allowing customers who are negatively impacted by COVID and who already have an arranged overdraft on their main personal current account to request up to GBP 500 interest-free for a further three months; it also means providing further support in the form of lower interest rates on borrowing above the interest-free buffer and repayment plans for those who would benefit from them. In April, FCA set a temporary general expectation across the market that firms should ensure all overdraft customers are no worse-off on price when compared to the prices they were charged before the recent overdraft rule changes came into force (those changes benefited most customers). FCA, however, does not propose to extend this temporary measure across the whole market. Customers that have not yet had a payment freeze or an arranged interest-free overdraft of up to GBP 500 and experience temporary financial difficulty, due to the pandemic, would be able to request one up until October 31, 2020.
When implementing the guidance, firms should be particularly aware of the needs of their vulnerable customers and should consider how they engage with them. Firms should also help customers understand the types of debt help and money guidance that are available and encourage them to access the resources that can help them.
Related Links
- Initial Press Release
- Press Release on Further Support
- Draft Guidance on Credit Cards
- Draft Guidance on Overdrafts
- Draft Guidance on Personal Loans
- Draft Guidance on Motor Finance
- Information on Mortgage Payment Holiday
- Information on Consumer Loans
Comment Due Date: June 22, 2020
Keywords: Europe, UK, Banking, Consumer Credit, COVID-19, Credit Risk, Guidance, Payment Holiday, FCA
Featured Experts

Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous Article
EU Publishes Corrigenda to CRD 4 and CRD 5Related Articles
EBA Launches Stress Tests for Banks, Issues Other Updates
The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.