The Financial Conduct Authority (FCA) has today (19 June 2020) announced proposals to extend the payment freeze of consumer credit products for people whose finances have been negatively impacted by Covid-19.
Reacting to the announcement, Richard Lane, Director of External Affairs here at StepChange, said:
“The extension of payment holidays for credit cards, overdrafts and other forms of consumer credit will come as a huge relief for the many thousands of households struggling to keep up with credit repayments during this pandemic.
"But unless further long-term support measures are put in place, this relief will be short-lived. Our own research has found that 4.2 million people have borrowed to make ends meet since lockdown began, storing up a tsunami of £6bn of debt that is set to worsen if left unchecked.
“With many households wondering how they will catch up with deferred payments, the FCA must not let payment holidays end with a cliff edge to debt. Withdrawing help from those who need more time to recover risks exposing them to avoidable long-term financial difficulty.
“With people also falling behind on rent, council tax and fuel bills, the Government needs to build up dedicated hardship funds for those forced into debt thanks to Covid-19. In the long-term, more viable alternatives to high cost credit must be made available to prevent those on the lowest incomes falling into a debt spiral.”