FCA proposes to extend payment deferrals

The FCA has suggested extending the availability of payment deferrals for borrowers experiencing financial difficulty as a result of coronavirus.

The regulator’s proposals come after increasing lockdown restrictions announced by the government in the past week.

In September, the FCA announced it would be implementing tailored support for borrowers affected by COVID-19 after 31 October, stating that it would keep this under review as the pandemic evolved.

Under the FCA’s new proposals, those who have not yet had a payment deferral would be eligible for two payment deferrals of up to six months in total.

For those who currently have an initial payment deferral, they will be eligible for another payment deferral of up to three months, while those who have resumed repayments after an initial payment deferral would be eligible for another payment deferral of up to three months.

Borrowers would have until 31 January 2021 to request a payment deferral, and the regulator stated that a payment deferral under these proposals would not be reported as missed payments on a borrower’s credit file.

The FCA has also proposed that no one will have their home repossessed without their agreement until after 31 January 2021.

“We are working with lenders to ensure enhanced support remains available to borrowers struggling financially following changes in the coronavirus situation across the UK,” said FCA interim executive director of strategy and competition, Sheldon Mills.

“Tailored support will still be offered and remains the most appropriate option for many borrowers, but we are proposing to extend payment deferrals for additional support. We also want to make sure no one has their home repossessed during this time.

“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. This allows support to be targeted to those most in need.

“We are also asking borrowers not to contact their lender yet, and instead wait for further updates, including from their lenders, soon.”

The FCA said it is asking for comment on its proposals by 10am on Thursday 5 November.

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