The Analysis News & Opinions
FCA confirms new rules for credit
The Financial Conduct Authority (FCA) has confirmed measures to ensure that firms provide tailored support for users of certain consumer credit and overdraft products who continue to face payment difficulties due to coronavirus (Covid-19). The guidance will cover users of credit
cards and other revolving credit (store card and catalogue credit), personal loans, motor finance, buy-now pay-later (BNPL), rent-to- own (RTO), pawnbroking and high-cost short-term credit (HCSTC) products and overdrafts. The measures apply both to consumers
who have benefited from support under the current guidance and continue to face financial difficulties, as well as those whose financial situation may be newly affected by coronavirus after the current guidance ends on 31 October. Christopher Woolard,
interim chief
executive at the FCA, said: “For those who can restart payments, it is in their best interests to do so. “However, for those who are still facing
payment difficulty, or are newly in difficulty, as a result of coronavirus, we expect firms to offer a tailored package of support taking into account the ongoing situation and local or national responses to the crisis. “There should be no ‘one size fits all’
approach taken by firms to help consumers get back on track.” The FCA expects firms to:
l Recognise the uncertainties and challenges that many customers will face in the coming months as the crisis develops, and provide tailored support which reflects their individual circumstances. l Work with customers approaching the end of a payment deferral to provide support before they miss payments. l Be flexible and employ a full range of shorter and longer-term options to support their customers and minimise stress and anxiety experienced by customers in financial difficulty. l Give customers time and opportunity to repay and do not pressurise them into
October 2020
repaying their debt within an unreasonably short period of time. l Put in place sustainable repayment arrangements which are affordable and take account of their customers’ wider financial situation including their other debts and essential living expenses. l Prevent customers’ balances from escalating once they have put in place a repayment arrangement by suspending, reducing, waiving or cancelling any interest, fees or charges necessary to make that happen. l Recognise and respond to the needs of vulnerable customers. Additionally, the FCA has confirmed that
it expects firms to contact overdraft customers who have received temporary support to determine if they still require assistance. Where a customer needs further support
or where a newly affected customer gets in touch asking for help, firms should provide tailored support such as reducing or waiving interest, agreeing a programme of staged reductions in the overdraft limit, or supporting customers to reduce their overdraft usage by transferring the debt. The guidance sets out when these options may be appropriate. The FCA will monitor how firms
apply the guidance to ensure borrowers are treated fairly, with regard to their individual circumstances. Customers should be given time to consider their options and to seek debt advice (if necessary) before deciding on the support they take. Where consumers require further support
from firms, either at the end of payment deferrals under the guidance, or where they need support for the first time, this will be reflected on credit files in accordance with normal reporting processes. This will help ensure lenders have
an accurate picture of consumers’ financial circumstances and reduce the risk of unaffordable lending. Firms should be clear about the credit file
implications of any forms of support offered to consumers.
www.CCRMagazine.com Opinion
New online round-table debate is announced
As we continue to encourage the sharing of knowledge and insight around the industry, we are very proud, this month, to announce that we will be hosting a new online Round- Table Debate in association with Flexys. Building on our popular ‘real-world’
debates, this new discussion will aim to bring these opportunities for peers to share knowledge and insight, as well as to network, into an online environment. We will cover one of the most important
issues for today’s industry, in terms of what 2021 promises for collections. We will aim to review where we are now before tackling some of the very real challenges, such as: l Prolonged stress on jobs and a high level of income insecurity as COVID measures continue and with mass redundancies forecast before the end of the year and into 2021. l Managing high volumes of customers requesting extended forbearance with close scrutiny from regulators to ensure outcomes are fair, positive and tailored to individual circumstances. The continuing viability of arrangements will need to be monitored in a way that is cost-effective for the business and convenient for the customer. l Ensuring collections operational capability is dynamic and agile enough to manage fluctuating demand and has the ability to change and configure strategies as parameters and regulations continue to evolve. If you would be interested in attending,
please get in touch with me direct at the address below.
Stephen Kiely Editor, CCRMagazine stephen @
ccrmagazine.co.uk
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