Hartlepool advice chiefs welcome measures to help people struggling to pay back loans, overdrafts and other debts during virus crisis

Joe Michna of Citizens Advice Hartlepool.

The Financial Conduct Authority (FCA) has issued new guidance to lenders on relief measures that should be given to anyone unable to pay back things like payday loans and hire purchase agreements.

Citizens Advice Hartlepool’s Debt Advice Team has welcomed the advice saying millions of householders nationally are struggling to meet their payments on personal loans, credit cards and overdrafts because of the health crisis.

The FCA guidance is that customers of banks, building societies or other lenders experiencing temporary payment difficulties because of coronavirus should be granted a payment deferral for three months.

Where such a deferral is not considered appropriate by the lender, they should offer other ways to provide temporary relief to the borrower such as reduced payments or a longer term for the loan.

The FCA has also stated that in such circumstance the borrowers’ credit rating will not be affected.

Motor finance companies should not try to terminate hire purchase agreements or repossess vehicles if the customer’s financial difficulties are down to the current crisis.

They should also offer payment deferral options for three months and consider £1 token payments.

And for payday loans, lenders are advised to give a one month payment freeze to customers facing temporary difficulties due to the virus with no additional interest charged.

For overdrafts, the FCA has said no interest should be charged on the first £500 of the balance of an agreed overdraft.

Joe Michna, Citizens Advice Hartlepool manager, said: “The FCA has responded to the coronavirus health crisis in a way that means that households in debt can gain some relief from having to maintain their monthly payments to banks and finance companies.

“Householders in Hartlepool and elsewhere are under considerable financial pressures and these payment deferral options will hopefully allow them to cope with their personal debts in the short-term.”

He reminded people the advice service is still there to help and anyone having problems in coming to a deferral agreement with lenders should not hesitate to contact them.

Call (01429) 408401 or 0300 3309005, email [email protected] or [email protected]

Also see www.citizensadvice.org.uk

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