Payment holidays were designed to offer a financial helping hand to households struggling amid the ongoing pandemic. The support measure was scheduled to end on October 31, bringing to a close months of payment freezes for many Britons. However, amid the second lockdown and ongoing issues, the Financial Conduct Authority (FCA) has announced how lenders should proceed.
For those who are worried about their credit score going forward, the FCA has also issued further guidance.
The proposals suggested would mean a payment holiday would not count on a borrower’s credit file.
However, this does not mean lenders cannot take this into consideration when making lending decisions in the future.
For those who have already received two payment holidays, the FCA has advised a different approach.
Sheldon Mills, Interim Executive Director of Strategy and Competition at the FCA, commented on the measures.
He said: “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.
“It is in borrowers’ own long term interest only to take a payment deferral when absolutely necessary. Those that are all to keep paying, should do so.
“We are also asking borrowers not to contact their lender yet, and instead wait for further updates, including from their lenders, soon.”