European P2P lenders urged to extend payment breaks
European peer-to-peer lending platforms have been urged to extend payment breaks to support borrowers through the second wave of Covid-19 and its subsequent lockdowns.
The European banking regulator has reactivated its guidelines on payment breaks to ensure that loans which had previously not benefitted from a payment break can now do so.
The European Banking Authority (EBA) said that only loans which are suspended, postponed or reduced under general payment breaks no longer than nine months in total, including previously granted payment holidays, can benefit from the application of new ones.
The revised guidelines will apply until 31 March 2021.
Read more: Zopa extends support to borrowers impacted by Covid-19
“The role of banks to ensure the continued flow of lending to clients remains of utmost importance and with the reactivation of these guidelines, the EBA recognises the exceptional circumstances of the second Covid-19 wave,” the EBA said.
The EBA published its original guidance on payment breaks at the height of the pandemic in April, then in June extended the application date by three months.
Read more: FCA urges cooperation between lenders and struggling consumers
In September, the banking regulator phased it out, saying it did not consider a further extension of the measures adequate and told lenders to return to the practice that any rescheduling of loans should follow a case-by-case approach.
In the UK, the Financial Conduct Authority updated its guidance on payment deferrals for consumer credit customers in November.
The guidance says that consumers who have not yet had a payment holiday will be eligible to apply for a payment break of up to six months, and those who currently have a payment deferral can apply for another one, as long as the total length doesn’t exceed six months.
Consumers who have previously had a payment holiday of less than six months will also be eligible to apply for a further one, as long as they don’t exceed six months in total.
