People struggling with loan repayments and overdraft fees amid the coronavirus pandemic will be granted temporary relief under new proposals.
The Financial Conduct Authority is asking banks to freeze payments on loans and credit cards for up to three months for those facing difficulties.
The City watchdog also wants interest on the first £500 of existing overdrafts to be frozen for a period.
The FCA said the outbreak had caused an “unprecedented financial shock”
The watchdog is asking banks to respond to the proposed measures by Monday 6 April, and it wants them to come into force by Thursday 9 April.
After the FCA recently announced an “overhaul” for overdraft charges, many banks increased their charges and clustered around a similar figure of about 40%.
In its latest announcement, the watchdog said: “Over the next 90 days, firms would have to ensure all consumers are no worse off and not paying more than they would have under previous prices.”
Other measures it has proposed include:
- A three-month payment freeze on loans
- A temporary freeze on credit card debt up to three months
- Zero interest on up to £500 for customers affected by coronavirus using an arranged overdraft
The FCA also said that consumers using any of these measures should not see their credit rating affected.
FCA interim chief executive Christopher Woolard said: “If confirmed, the package of measures we are proposing today will help provide affected consumers with the temporary financial support they need to help them weather the storm during this challenging time.”