Payment holidays for car finance and credit cards extended with warning from FCA

The Financial Conduct Authority has extended applications for payment holidays – but with a warning.

The FCA introduced a temporary holiday of up to six months for those struggling to keep up with payments on mortgages, personal loans, credit cards, motor finance, rent to own, buy-now pay-later, pawnbroking and high-cost short-term credit, to support consumer credit customers financially affected by coronavirus earlier this year.

The scheme was due to end with a deadline on October 31, the same day Boris Johnson announced England will enter a month long lockdown from November 5.



MoneySavingExpert Martin Lewis Tweeted on Saturday (October 31) that he expected the FCA to make the decision to extend their temporary support.

At midday on Monday, November 2, the FCA posted the following announcement on their site:

“We said we would keep our support for consumer credit borrowers under review as the coronavirus (Covid-19) pandemic evolved.

“Following the announcement of the latest Government restrictions in response to the coronavirus outbreak, we will propose updates to our temporary guidance on personal loans, credit cards, motor finance, rent to own, buy-now pay-later, pawnbroking and high-cost short-term credit to support consumer credit customers financially affected by coronavirus.”



File photo dated 25/01/18 of money. Nearly a quarter of households fear that returning to the office will put their finances under pressure after five months of working from home during lockdown, a survey has shown.

The FCA went on to warn: “It is important that consumer credit customers who can afford to do so continue to make repayments.

“Borrowers should only take up this support if they need it.”

Also Check:  Covid-19 treatment could drive up resistance to antibiotics, study claims

Martin Lewis has previously urged those considering a payment holiday to fill out a self-assesment to see whether they would benefit from taking one.

He warned: “If you need one, take it, but only take it if you need it.

“That’s because, while a payment holiday is a good financial break and, if you’re struggling with other bills, it’s better than missing payments without an agreement, there are some real consequences to it:



“Interest racks up.   Most of these products are debt products. Interest isn’t frozen (with the exception of payday loan holidays), so it still racks up over the period.

“Normally you make repayments that lower the amount owed and reduce the interest, yet the fact you’re not paying while the interest still accrues means it will cost you more.

“It may affect your ability to get future credit. When the coronavirus payment holidays were first launched, the FCA and Chancellor were keen to note that it wouldn’t go on your credit file, nor impact your future chances of getting credit.



Embargoed to 0001 Monday July 13 Undated file photo of money. Councils have started drafting in bailiffs again to secure unpaid business rates from companies, days after the Chancellor set out the latest phase of the Government???s plan to protect jobs.

They FCA added in their statement: “To support those financially affected by coronavirus, we will propose that consumer credit customers who have not yet had a payment deferral under our July guidance can request one. This could last for up to 6 months unless it is obviously not in the customer’s interests. Under our proposals borrowers who are currently benefiting from a first payment deferral under our July guidance would be able to apply for a second deferral.

Also Check:  Disperal orders issued after Brits flock to Bournemouth beach

“In the meantime, consumer credit customers should not contact their lender just yet. Lenders will provide information soon on what this means for their customers and how to apply for this support if our proposals are confirmed.

“Consumer credit customers who have already benefited from payment deferrals and are still experiencing payment difficulties should speak to their lender to agree tailored support.”

Also announced was additional support for those with payday loans:

“For high-cost short-term credit (such as payday loans), consumers would be able to apply for a payment deferral of one month if they haven’t already had one.

The FCA are due to make another announcement later on today after a consultation with trade bodies and lenders.

Further information on payment holidays for mortgages will also be announced later on today.