Britain Extends Payment Freeze To Borrowers Hit By Coronavirus

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LONDON (Reuters) – Britain’s financial watchdog said on Monday it will extend pay holidays on credit cards, car financing, personal loans and pawned property before tighter coronavirus restrictions take effect this week.

FILE PHOTO: People walk during morning rush hour in Canary Wharf’s financial district amid the coronavirus disease (COVID-19) outbreak in London, Britain, on Sept. 28, 2020. REUTERS / Toby Melville

The Financial Conduct Authority (FCA) also extended the availability of deferrals for mortgage payments until January after Britain announced that a month-long lockdown in England would begin on Thursday to contain a second wave. of the pandemic.

Consumers who have not yet had a credit payment deferment under the guidance issued in July can request one that lasts up to six months, the FCA said in a statement.

Borrowers who have already had a deferment could request a second, the FCA said.

“Borrowers should only accept this support if they need it,” the statement added.

For short-term, high-cost loans, such as payday loans, consumers can request a one-month deferral if they haven’t already had it, the FCA said.

“We will work with commercial agencies and lenders on how to implement these proposals as quickly as possible, and we will make another announcement shortly,” the FCA said.

The new lockdown coincides with the traditional start of the holiday shopping season, a time of increased use of credit cards and a critical period for retailers looking to stay in the black for the year.

The FCA said it also proposed that mortgage borrowers who have not yet applied for a payment vacation period can request one for up to six months in total.

Those who had already obtained an initial three-month deferral under the guidance that expired last month, or who have started repayments on an initial deferral, can now request another three-month pay period, the FCA said.

Mortgage borrowers would have until January 31, 2021 to request a deferral, and no one will be able to repossess their home without their consent until after that date, the watchdog proposed.

The proposals have been up for public consultation until Thursday before final guidance is released.

“Lenders will provide information after today’s announcement on how to apply for this support,” said Eric Leenders, managing director of personal finance at UK Finance, a banking industry body.

Huw Jones Report; Edited by Rachel Armstrong and Edmund Blair

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