The Financial Conduct Authority (FCA) has said it expects personal loan providers, which would include some peer-to-peer lenders, to offer payment freezes to borrowers affected by the coronavirus outbreak.
The City watchdog has issued a short consultation that said it would require regulated firms to offer payment deferrals for three months where customers are facing or expect to face financial difficulty.
An example of a situation in which a payment deferral may be appropriate is where there is or will be a reduction in household income that would have otherwise been used to make loan payments, the regulator said.
“Firms can choose to make the enquiries they consider necessary in order to judge if a payment deferral serves the customer’s interests but there is no expectation under this guidance that the firm investigates the circumstances surrounding a request for a payment deferral,” the FCA said.
“Firms should make clear in their communications, including websites, that payment deferrals are available.
“In addition, if, during an interaction between the firm and the customer, the customer provides information suggesting that the customer may be experiencing or could reasonably expect to experience temporary payment difficulties as a result of circumstances relating to coronavirus, the firm should ask whether the customer wishes it to consider granting a payment deferral.”
Firms are not prevented from continuing to charge interest during the three-month period.
Businesses can respond to the FCA proposals by Monday (6 April) and the rules, if approved, would be introduced on 9 April and last for three months initially.