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

    FINMA Approves Merger of Credit Suisse and UBS

    The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.

    March 21, 2023 WebPage Regulatory News

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.

    March 07, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News

    MFSA Sets Out Supervisory Priorities, Issues Reporting Updates

    The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023

    March 02, 2023 WebPage Regulatory News

    German Regulators Issue Multiple Reporting Updates for Banks

    Deutsche Bundesbank published the nationally deactivated validation rules for the German Commercial Code (HGB) users on the taxonomy 3.2, which became valid from December 31, 2022

    March 02, 2023 WebPage Regulatory News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8806