Borrowers will be able to apply for further payment holidays on credit cards, loans and other finance agreements.
The Financial Conduct Authority (FCA) has extended applications for payment breaks until 31 March 2021, as it seeks to offer additional support to borrowers during the pandemic.
Here, Which? explains how the new rules will work and how to apply for a payment holiday if you need one.
The original deadline to apply for a payment holiday on , and other credit products passed on 31 October, and banks were expected to instead offer tailored support to customers facing financial difficulties from 1 November.
The new rules for customers with loans, credit cards, motor finance, rent-to-own, buy-now-pay-later and pawn broking credit are as follows:
The new rules come into force on 25 November, and borrowers will have until 31 March 2021 to request a payment holiday.
Taking a payment holiday means it'll take you longer and cost you more to repay your debt. With this in mind, the FCA says borrowers should only apply for payment holidays if they need them.
The FCA has confirmed that firms will continue to offer tailored support to overdraft borrowers, as set out in September. This could include:
Premium finance consumers will continue to benefit from the tailored support that was announced on 30 October.
The new rules will come into force on 25 November, but the FCA has encouraged firms that are able to start providing support sooner to do so.
To get a payment holiday, you'll need to contact your lender directly. Some banks have online systems in place, but others will require you to phone them.
It is still possible, however, that lenders will look at whether you've taken payment holidays when considering applications for further credit in the future.
The FCA says that customers who have already benefitted from two payment deferrals (or one for high-cost short-term credit payment holiday) and are still experiencing payment difficulties should speak to their lender who will be able to provide tailored support.
Tailored support may be reported on your credit file, but the FCA says lenders should inform you if this will be the case.
If you've already benefited from a payment holiday and are still experiencing financial difficulties due to COVID-19, the FCA says you should speak to your lender to get support.
Additional support may include short or long-term measures, such as offering sustainable payment plans with realistic timelines or cancelling, reducing or suspending interest payments.
The rules are as follows:
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This article was originally published on 3 November 2020. It has since been updated. The last update was on 20 November with further details from the FCA on extending support for borrowers.