The Financial Conduct Authority (FCA) is proposing to extend payment holidays as well as other support available to personal loan, credit card, motor finance, rent-to-own, buy-now-pay-later and pawnbroking customers who continue to experience payment difficulties due to coronavirus.

As part of the proposals, those who have yet to have a payment deferral will be eligible for two payment holidays of up to six months in total.

For those who currently have an initial payment deferral, they will be eligible for a further payment deferral of up to three months.

High-cost short-term credit (HCSTC) customers, such as those with payday loans, who have not yet had a payment deferral would be eligible for a payment deferral of one month.

Further, borrowers would have until 31 January 2021 to request an initial payment deferral.

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It also said that a payment deferral under its proposals would not be reported as missed payments on a borrower’s credit file.

However, this doesn’t mean that a customer’s ability to access credit will be unaffected in the future, as lenders may take into account a range of information when making lending decisions.

Where customers have already taken two payment holidays (or one for HCSTC), and are still experiencing payment difficulties, the FCA said they should speak to their lender so that tailored support is offered.

This also applies to those who have resumed repayments after an initial payment holiday, as they’re not entitled to a further deferral, but should receive tailored support if experiencing payment difficulties.

Tailored support may be reported on a borrower’s credit file, and lenders should inform borrowers where this will be the case.

Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “We recognise the challenges that many consumers face as the coronavirus crisis develops, and we are working to ensure support remains available to consumers who need it.

“We know that many consumer credit borrowers are vulnerable. That’s why tailored support reflecting borrowers’ individual circumstances will still be offered and remains the most appropriate option for many. We are also proposing to extend payment deferrals for some consumer credit products to offer additional support.”

The consultation on the proposals closes on Friday with the FCA expecting final guidance to be published as soon as possible.

Support for other borrowers

The FCA also confirmed firms will continue to offer tailored support to overdraft borrowers, including:

• reducing or waiving interest
• agreeing a programme of staged reductions in the overdraft limit
• transferring the overdraft debt to an alternative credit product on more favourable terms.