The Financial Conduct Authority (FCA) has told banks and other lenders not to crack down on customers who will struggle after repayment holidays come to an end.
In March, as the UK went into lockdown, the financial watchdog set out guidance on how providers of credit to consumers like personal loans, overdrafts, motor finance and so forth should offer payment deferrals. Millions of consumers have requested three-month payment holidays, which can be applied for up until the end of October.
The FCA has now set out further guidance on how it expects these credit providers to offer tailored support for those still struggling once a second three-month payment holiday ends.
Banks should provide support before a payment is missed and be flexible by, for example, offering lower interest rates or agreeing staged reductions in overdraft limits. They must not pressure customers into paying their debt within an unreasonably short period of time.
“Our proposals are designed to help people who have been facing payment difficulties because of the pandemic get back on track with tailored support from firms,” the FCA said. “For those who can restart payments, it is in their best interests to do so.”
The boss of British Airways has said the company is doing everything possible to make it through the winter, highlighting the pressures it faces from the coronavirus crisis as he was grilled by lawmakers over plans to cut thousands of jobs.
Painting a bleak picture, BA chief executive Alex Cruz said the airline is running at 25 to 30 per cent of its normal flight schedule. He urged the UK Government to bring in Covid-19 testing to shorten 14-day quarantine rules as a way of getting people travelling again.
He added that fear of flying during the pandemic had destroyed any hope of a rapid return to normality as the traditionally weaker winter period looms.
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“We’re still fighting for our own survival,” Mr Cruz told a parliamentary hearing. “We are taking every measure possible to make sure we can actually make it through the winter.”
BA has said it needs to cut up to 13,000 jobs, or about 30% of its workforce, as the travel market will take years to recover from Covid-19. The airline has been under attack from politicians for months over it plan to cut jobs, but the pressure eased slightly today when parliamentary transport committee chairman Huw Merriman said BA’s staff relations appear to have improved.
London-listed holiday company Tui plans to raise between £637 and £910 million to help it ride out the travel slump, a German newspaper has reported.
Citing sources familiar with the matter, German business daily Handelsblatt said the stock offering could come as soon as next week. Tui, Europe’s largest travel group, suffered a £1 billion loss in the second quarter of this year.
Tui, which is headquartered in Hanover, declined to comment.