The FCA issues new guidance on payment pauses for personal loans

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The Financial Conduct Authority (FCA) has said guidance on deferred payments for personal loan borrowers is expected to expire at the end of October but will remain under review.

Troubled consumer credit borrowers were allowed apply for three-month payment deferrals under FCA leadership since July, scheduled to end on October 31.

The City Watchdog’s updated draft policy says borrowers can still apply for the assistance until the end of October, meaning some deferrals could last until the end of January 2021, but added that the rules for granting payment breaks are expected to end as late as next month will.

“We expect the July guidance to expire on 31 October but will keep that in mind depending on how the general situation evolves,” FCA said.

The FCA is now considering drafting a policy to replace the current probate rules.

The guidelines urge companies to treat customers fairly and ensure payment arrangements are affordable.

It also proposes suspending, reducing, waiving or canceling interest, fees or charges for missed payments.

Continue reading: FCA relaxes SMCR rules during pandemic

The regulator added that it should be made clear that any arrears under the new guidance would appear on credit files after October, which is not the case under the current deferral rules.

“Our proposals are designed to help people who have been facing payment difficulties due to the pandemic get back on track with tailored support from businesses,” said FCA interim CEO Christopher Woolard.

“For those who are able to resume payments, it is in their best interest to do so.”

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