This article is more than 5 months old

This article is more than 5 months old

The financial regulator has announced plans to freeze loan and credit card payments for up to three months as part of emergency measures for consumers impacted by the coronavirus outbreak.

The measures, which would usually require a lengthy consultation, could come into force as soon as 9 April. The Financial Conduct Authority said the process was being fast-tracked “given the national emergency and the significant impact on consumers’ finances right now”.

It is aimed at consumers and renters who are not benefiting from existing relief measures that have targeted homeowners – with mortgage payment holidays – or business owners.

Quick guide UK government support for workers and businesses during the coronavirus crisis Show Hide Income subsidies Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees. Loan guarantees for business Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies. Business rates Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms. Cash grants Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000. Benefits Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits. Sick pay Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills. Other Local authorities to get a £500m hardship fund to provide people with council tax payment relief. Mortgage and rental holidays available for up to three months.

The proposals include a temporary freeze on loan and credit card payments for consumers who are facing financial difficulties as a result of the outbreak.

The FCA said consumers who were at risk of having their credit cards suspended because of the regulator’s new affordability rules would not lose access to their accounts.

Lenders would also have to waive interest charges on arranged overdrafts up to £500 over the same period, which would extend relief already announced by some banks including Barclays, HSBC and Lloyds.

Consumers who dip into unauthorised overdrafts would also benefit. Most banks have started charging a single interest rate of 39.9% for both arranged and unauthorised overdrafts as part of new rules meant to standardise charges this month.

But the FCA’s emergency measures force firms to make sure all customers are “no worse off” due to the changes, meaning some customers may revert to lower interest rates.

Banks and credit card providers will have to ensure that consumer credit ratings are unaffected by any of the measures, the FCA said.

The FCA’s interim chief executive, Christopher Woolard, said: “Coronavirus has caused an unprecedented financial shock with far-reaching consequences for consumers in every corner of the UK.

“If confirmed, this 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.”

The news has been welcomed by consumer advocates including Martin Lewis, who said it would help level the playing field for customers who may not have time to shop around for better rates during the crisis.

Lewis, the founder of MoneySavingExpert.com, said: “We have already seen many unsecured lenders put some forbearance criteria in place … However the provision is patchy and has become a banking lottery and that’s unfair – no one could have taken into account when they signed up for products how considerate each lender would be in these extraordinary times.”