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Law360, London (August 17, 2020, 11:35 AM BST ) A consumer group has called on Britain's finance watchdog to extend support measures for people struggling with financial difficulties in the wake of the COVID-19 chaos until 2021.
Which? has said that the Financial Conduct Authority should "take urgent steps" to offer more help to households struggling to pay back loans and credit products because of the economic fallout created by the global pandemic. Existing relief measures are due to expire at the end of October.
"The regulator has acted quickly and effectively to help those struggling financially due to the pandemic, but it must be prepared to take further bold action to prevent millions of people from being hit by a perfect storm of financial pressures in the coming months," Gareth Shaw, head of money at the consumer interest group, said on Thursday.
"The regulator must treat all consumers fairly — ensuring financial support is still provided to those who need it and also available for those who may face financial problems for the first time after Oct. 31," Shaw added.
Which? submitted four suggestions to the FCA's consultation on its temporary COVID-19 relief measures, which have included payment holidays and interest freezes for loans and credit cards.
The first recommendation is that the watchdog should extend the existing relief measures, scheduled to expire on Oct. 31, by three months until Jan. 31.
The consumer body noted that these payment holidays are not an indefinite solution. But consumers will probably face more difficulties in coming months when the government's furlough scheme ends. Which? said that banks and lenders should continue to offer payment breaks as well as interest freezes or other forbearance measures to consumers who need them.
"The huge number of payment holidays taken highlights the scale of financial difficulty people in this country are facing," Shaw said, adding that this is a "situation that is likely to become worse as support measures like the furlough scheme come to an end."
The group also urged the regulator to delay the return of rules on credit ratings to make sure consumers who have taken payment holidays do not have their long-term creditworthiness damaged. It has also asked the City watchdog to ensure that requests for forbearance are dealt with swiftly by banks and lenders.
The FCA introduced temporary relief measures, including payment freezes, for loans and car finance in April. These were recently extended until Oct. 31.
The watchdog instructed rent-to-own companies, car-finance providers and pawnbrokers in July to extend their payment freezes to borrowers in financial difficulty during the crisis.
It has also extended mortgage breaks, giving home-owners still suffering from financial difficulty due to the pandemic an extra three months free from repayments.
--Additional reporting by Joanne Faulkner and Najiyya Budaly. Editing by Ed Harris.
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