Financial support schemes – Debt Recovery
Since the introduction of the government’s varied financial support schemes, millions of people have taken advantage of payment delays, freezes and other mechanisms at their disposal. If you are a creditor who deals in providing credit cards, store cards, catalogue credit schemes, personal loans or overdrafts, the FCA has now made further proposals as to how you should deal with your debtors. Many of these involve extensions to the scheme which may impact your ability to collect what would otherwise be overdue debt.
The new proposals, in summary, include;
· Reviewing whether a customer can restart their payments following the period of frozen payments coming to an end .
· Agree with your customer a repayment plan for the missed payments. Do not just demand the entire payment if this is not feasible.
· Continue to provide help to those who need it by reducing payments to an affordable level for a further 3 months
· If you provide an overdraft facility, allow customers to request up to £500 interest-free for a further 3 months (for those who already have an arranged overdraft being used on their main current account)
· Extending the scheme’s life for those who may face difficulties later on, up until 31 October. This would allow a customer to request a payment freeze or overdraft at a time that it is truly needed.
· Ensure payment freezes do not leave a negative record on the customer’s credit file.
· Be aware of the needs of vulnerable customers and ensure all customers are aware of all types of debt help
It is important to note that this guidance applies only to the types of credit mentioned above. It does not apply to other types of credit such as the ever popular “buy-now-pay-later” schemes or high cost, short term loans (such as payday loans).