Support to continue for credit and overdraft customers

Consumers still facing financial difficulties should still be protected after payment holidays on credit cards, personal loans and overdrafts end on October 31st says Britain’s financial watchdog.

Draft guidance for lenders issued by the Financial Conduct Authority (FCA) warns banks and other lenders not to pursue customers who are still struggling once the period of grace ends.


When the pandemic lockdown began in March the FCA set out how providers could offer payment deferrals for credit agreements like personal loans, overdrafts, motor finance, buy-now-pay-later and pawnbrokers.

Since then millions of consumers across the country have requested three month holidays and can continue to do so until October 31st.

Latest figures show 1.08 million credit card holidays were granted along with 738,000 personal loan breaks and other deferrals.

More help

Now the regulator has suggested that consumers still in financial difficulty should receive further help from their lenders.

They have been asked to look at individual circumstances and to make offers like waiving interest and supporting customers to reduce their overdraft by transferring some of the debt.

But there will be a difference between the new aid and the former holidays because any new agreement will be recorded on credit reports and can be checked up on and thereby reduce the risk of unavoidable lending.

Tailored support

FCA Interim Chief Executive Christopher Woolard said: “Our proposals are designed to help people who have been facing payment difficulties because of the pandemic get back on track with tailored support from firms. For those who can restart payments, it is in their best interests to do so.”
If these measures are confirmed, the FCA would expect that firms:

  • Recognise the uncertainties and challenges that many customers will face in the coming months, and provide tailored support which reflects their individual circumstances.
  • Work with customers approaching the end of a payment deferral to provide support before they miss payments.
  • Be flexible and employ a full range of shorter and longer-term options to support their customers to minimise stress and anxiety experienced by customers in financial difficulty.
  • Put in place sustainable repayment arrangements which are affordable and take account of their customers wider financial situation including their other debts and essential living expenses.
  • Give customers time and opportunity to repay and do not pressurise them into repaying their debt within an unreasonably short period of time.
  • Prevent customers’ balances from escalating by suspending, reducing, waiving or cancelling any interest, fees or charges necessary to make that happen.
  • Recognise and respond to the needs of vulnerable customers.


The regulator is also asking lenders to contact anyone who has had an overdraft payment holiday to see if they still need assistance.

If they do it says firms should use measures like waiving interest, agreeing a series of staged reductions or supporting the customer by transferring some of the overdraft usage to debt.

Best interest

Commenting on the guidance Eric Leenders, managing director of personal finance at UK Finance, said: “The industry has provided unprecedented support to customers as part of its clear plan to get Britain through the coronavirus crisis.

“It will always be in the best interest of customers who are able to resume their loan payments to do so.

However, lenders stand ready to offer tailored support and flexibility to those who continue to face financial difficulties and will be working closely with the Financial Conduct Authority as it finalises this guidance.

“It is vital that those who are experiencing payment difficulties get in touch with their provider and make use of the online support available as soon as possible to discuss the options available to them.”