Meanwhile, while those affected financially by the virus outbreak will benefit from a GBP 500, fee-free overdraft. Loan and credit card repayments are to be frozen for three months as the Financial Conduct Authority (FCA) urges banks to provide consumers with financial relief in the face of an unprecedented crisis. The regulator has also proposed that banks offer a GBP 500 interest-free overdraft, with anyone financially affected by the coronavirus pandemic eligible to apply.
The stopgap measures aim to support users of consumer credit products that might be facing financial difficulties because of the “exceptional circumstances” arising from the virus. Previously announced changes to overdrafts meant that from 6 April financial institutions would only be able to charge a single annual interest rate for both arranged and unarranged overdrafts. Many providers had pegged their interest rates at around 40%, meaning the GBP 500 interest-free overdraft would provide relief for many.
The FCA proposals for overdrafts and loan repayments will go out for consultation on Monday 6 April 2020 and if approved by banks could provide significant financial relief for hundreds of thousands of people. If confirmed, measures would come into force by 9 April.
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