Payment holidays on credit cards, car finance, personal loans and pawned goods have been extended following the Government’s announcement of a second lockdown from Thursday 5 November.
The Financial Conduct Authority (FCA) has stated that individuals that had not yet deferred a payment could request a six-month payment holiday, while short-term credit can be deferred for one month.
The payment holidays were brought in by the FCA in April before being extended for an additional three month period in July. However, the rules, which are UK-wide, have now been reviewed, with concerns being raised over the impact of stricter coronavirus restrictions.
Additionally, the payment holidays will apply to individuals who have rent to own or ‘buy now, pay later’ deals, with anyone who is already benefitting from a deferral now able to apply for a second one.
The extension of payment holidays will come as a relief to many, with non-essential retail businesses set to close at 00.01 on Thursday 5 November and individuals facing a reduction in income, particularly with the extension of the Coronavirus Job Retention Scheme (CJRS).
The FCA has emphasised that payment holidays should only be used if they are ‘really needed’, while banks and lenders have a duty to identify vulnerable individuals that may require additional support.
In a statement, the FCA said: “We will work with trade bodies and lenders on how to implement these proposals as quickly as possible, and will make another announcement shortly.”