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When everyone has a home

028 9024 5640: Housing & Debt Helpline for Northern Ireland

FCA measures to help indebted customers during lockdown

The Financial Conduct Authority (FCA) has made a number of changes which will give breathing space to people struggling with consumer debt during the lockdown. These temporary measures include assistance for people with overdrafts, credit cards, motor finance packages, payday loans and "buy now pay later" arrangements. Of late, our advisers have spoken to a number of clients who have felt pressured to pay other bills, including car loans, out of their first Universal Credit payment and who are now struggling with rent arrears. Anyone who is struggling with debt should discuss their options with their credit provider to see if they can avail of these new reliefs and shoud get free debt advice from reputable agency. Check AdviceNI's website for listings of local advice agencies. 

The FCA has stressed that these measures are for people who need immediate help and have cautioned that those who can afford to make payments should continue to do so 

Payment holidays

A three-month payment holiday is available on request on various credit arrangements, including

  • credit cards
  • personal loans (including logbook loans, guarantor loans and some community development finance loans, such as certain credit unions)
  • buy now, pay later arrangements
  • rent to own arrangements
  • pawnbroking arrangements. 

The MoneySavingExpert website has an excellent roundup of the measures that certain finance providers have put in place to assist customers at this time.

These measures must be requested from the credit provider and interest will continue to accrue during the payment holiday unless this has otherwise been agreed with the credit provider. There are time-frames within any forbearance must be requested so customers who are struggling should make enquiries as soon as possible.

Car financing

Some 6.5 million vehicles in the UK have been purchased using a finance scheme and customers often treat these payments as the most important debt to service, particularly if they are reliant on the use of the vehicle to get to work or other essential travel. On 27 April, the FCA announced that it had brought in temporary measures to relieve pressure on those who are struggling to meet their financial commitments under car financing agreements. The measures include

  • a three month payment holiday on request, during which time interest will continue to accrue
  • a ban on repossessions of vehicles where the customer has been affected by coronavirus
  • a requirement to offer some sort of financial assistance to customers who are struggling as a result of coronavirus where the payment holiday isn't appropriate. 

As with holidays for mortgages and other credit arrangements, the payment holiday is at the discretion of the lender and may not be offered to customers who are already struggling to pay their bills or who have had problem debt in the past. Where a car finance company has refused a payment holiday, it must offer some other form of help to assist struggling customers. Further information, including instructions as to how to request the payment holiday is available on the MoneySavingExpert website.

Payday loans

From 27 April, payday loan customers can request a one-month payment holiday on their loans. If the holiday is granted, interest will be frozen. The ability to request this payment holiday will continue until 27 July and once the holiday has ended, your lender has to allow you to make the deferred payment in an affordable manner. This will allow you to pay in smaller instalments if you cannot afford to make the missed payment as a lump sum. 

Mortgage and rent

Housing costs, such as rent and mortgage payments, should always be treated as a priority debt. Anyone who is struggling to make these payments should get advice from Housing Rights. Our advisers can talk you through measures in place to assist you and can advise you about benefits and other help which might be available to you if your income has been affected by the current crisis and you are struggling to keep up with your financial commitments. 

Tagged In

Coronavirus, Regulation, Repossession, Affordability

This article was written on 4 May 2020. It should not be relied on as a statement of the current law or policy position. For help with housing issues please contact our helpline on 028 9024 5640 or use our online chat service at www.housingadviceNI.org.