FCA: Payday lenders should freeze payments during COVID-19 disruption

The Financial Conduct Authority (FCA) has today announced a proposed package of measures to support customers facing financial difficulties due to COVID-19.

The regulatory body has unveiled additional measures it expects firms specifically in the high-cost credit and motor insurance industries to take during the disruption caused by the coronavirus pandemic.

The FCA has announced that payday lending firms will be expected to provide a one month interest-free payment freeze to customers facing payment difficulties due to the coronavirus pandemic.

In addition, it has outlined that RTO (rent to own), BNPL (buy now, pay later), motor insurers and pawnbrokers will be expected to provide a three-month payment freeze to customers.

Christopher Woolard, interim chief executive at the FCA, commented: “We are very aware of the continued struggle people are facing as a result of the pandemic.

“These measures build on the interventions we announced last week, and will provide much needed relief to consumers during these difficult times.

“If a payment freeze isn’t in the customer’s interests, firms should offer an alternative solution, potentially including the waiving of interest and charges or rescheduling the term of the loan.”