Sharon McDougall - 5th November 2020 - 2 minutes to read
People struggling with their personal debts due to the latest coronavirus lockdown restrictions should soon be able to defer their repayments to creditors to ease some of the financial burdens they’re feeling.
The Financial Conduct Authority (FCA) has said that anyone who hasn’t yet taken up the option of a debt repayment postponement will be eligible for two payment deferrals that could last a combined total of up to six months.
Meanwhile, anyone who has already deferred their debt repayments at some point in 2020 should be able to apply for one further deferral lasting for up to three months.
Those options are to be made available in the context of all personal loans, credit cards, motor finance, rent-to-own and buy-now pay-later contracts.
For ‘high-cost short-term’ borrowing arrangements, such as payday loans, the rules are slightly different, with anyone who hasn’t yet asked for a repayments deferral to be allowed the opportunity to request one for a period of one month.
The FCA has emphasised that it wants to see anyone who can continue to make their repayments to creditors to carry on doing so, while also emphasising that lenders are expected to provide support to people who clearly need it in light of the pandemic and the lockdown situation.
“We recognise the challenges that many consumers face as the coronavirus crisis develops, and we are working to ensure support remains available to consumers who need it,” said Sheldon Mills, interim executive director of strategy and competition at the FCA.
“It is in borrowers’ own long-term interest only to take a payment deferral when absolutely necessary. Those that are able to keep paying, should do so,” he said.
It was revealed recently by Which? that there was a sharp rise in the number of people failing to make their credit card and loan repayments during October as financial support measures were scaled back nationwide.
Remarkably, according to the consumer champion, the number of people across the UK defaulting on their credit cards jumped from around 410,000 in September to almost 780,000 in October.
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