A UK watchdog has ordered leading banks to offer three-month payment holidays on credit cards and loans to customers affected by the coronavirus crisis.
Customers at six major banks and building societies can apply for the temporary freeze on repayments from Thursday if they are in financial difficulty because of COVID-19.
HSBC (HSBC), Lloyds (LLOY.L), Royal Bank of Scotland (RBS.L), Barclays (BARC.L), Santander (SAN) and Nationwide will also give affected customers with arranged overdrafts up to £500 at zero interest for three months.
They have also agreed that all overdraft customers will be charged no more than what they were charged before recent overdraft changes started coming into effect.
Other lenders are under heavy pressure from Britain’s financial regulators to follow suit by 14 April. No customers benefiting from the temporary measures will have their credit rating affected, according to regulators.
The Financial Conduct Authority (FCA) urged lenders to make the changes through new guidance on how they meet their regulatory obligations to treat customers fairly. It said it had also relaxed its rules to make it easier for lenders to provide the support.
Further measures are expected soon to ease pressures on customers with car finance deals, while banks have already caved into pressure to offer mortgage holidays and suspend dividends.
Christopher Woolard, interim chief executive of the FCA, said: “We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic.”
But he urged customers to “think carefully” before using the measures and only apply if they need immediate help.
Woolard also urged customers to check firms’ websites for details and if necessary use online services to request assistance rather than phoning, with call centres under enormous strain. He also encouraged anyone only able to use the phone to “be patient” and preferably wait until after the Easter bank holiday weekend.
UK Finance, which represents many banks, said it welcomed the measures after the finance sector held “detailed discussions” with the regulator.
Eric Leenders, managing director of personal finance at the trade body, reiterated Woolard’s plea for customers to only use the measures if absolutely necessary and leave phone lines for those most in need.
“Lenders stand ready at this most difficult of times to support customers and help the country get through this crisis,” he said.
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