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Post by scepticalinvestor on Apr 2, 2020 10:27:23 GMT
www.moneysavingexpert.com/news/2020/04/regulator-proposes-relief-measures-to-help-consumers-during-coro/"The financial regulator is set to order banks to take new steps to help customers hit financially by the coronavirus pandemic, offering interest-free overdrafts of up to £500 and allowing payment holidays on credit and store cards, loans and catalogue debt. The Financial Conduct Authority (FCA) unveiled the plans today and is holding a short consultation on them this week. If the proposals are approved, banks will be expected to start enacting the new measures from Thursday 9 April."
I would take the above measures to include non-bank unsecured debt as well, thus impacting Ratesetter borrowers? Maybe I'm wrong. The article said that payday lenders are not included in the proposal, is RS categorised as one?
Does anyone know if the above measures would be applicable to the likes of RS?
The banks are getting loads of freshly printed money to get them through this, surely the govt. can't force RS types to partake in this unless there is some form of government support to tide them over the priod where they can't perform the usual debt recovery processes?
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Post by c4dds on Apr 2, 2020 11:06:58 GMT
I read about this today too and wondered the same. I'm sure ratesetter isn't classed as a bank, they're not getting any government help like banks do, so would be unfair for ratesetter to give interest free loans with no government assistance. Are there any ratesetter workers on this forum that could clarify?
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Stonk
Stonking
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Post by Stonk on Apr 2, 2020 11:29:59 GMT
Even if it's presently for banks only, I can clearly foresee it happening for all lenders. Imagine the outcry from borrowers if it applied to some (who happened to source their loan through one financial institution), but not all (who happened to use a different financial institution).
How would RS implement this? If borrowers stopped paying for (say) 3 months, then the PF would rapidly vanish with all the nasty side-effects, when in reality it shouldn't need to. So I would suggest a solution is to recalculate borrowers' repayment schedules to add a 3-month gap. Now, this might be a dead simple thing for RS to do, or it might be a technical nightmare ...
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Post by ruralres66 on Apr 2, 2020 11:31:35 GMT
Ask RS ?
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Post by jono75 on Apr 2, 2020 11:38:35 GMT
In these times a holiday on P2P loans for borrowers makes sense to me, I guess this would push the end dates of loans forward. I'd be happy with that personally, take this as a pause. I hope RS can still pay their staff if they do pause.
For me, it's better than loads of missed payments and PF getting depleted. There is after all no FSCS protection for us, this would help take away some of the risk of platform failure too. I guess the borrowers are not exactly flush with spare cash, or they wouldn't be using P2P loans.
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Post by scepticalinvestor on Apr 2, 2020 12:28:00 GMT
In these times a holiday on P2P loans for borrowers makes sense to me, I guess this would push the end dates of loans forward. I'd be happy with that personally, take this as a pause. I hope RS can still pay their staff if they do pause. For me, it's better than loads of missed payments and PF getting depleted. There is after all no FSCS protection for us, this would help take away some of the risk of platform failure too. I guess the borrowers are not exactly flush with spare cash, or they wouldn't be using P2P loans.
Absolutely. I'm all for forbearance for borrowers in these difficult times, on a case by case basis. But just concerned about RS having to treat borrowers the same way that big banks (effectively backstopped by the taxpayer) are being asked to.
The article says that this doesn't apply to payday lenders, so it is possible that non-bank lenders like RS might fall outside as well.
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rscal
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Post by rscal on Apr 2, 2020 13:17:38 GMT
Of course RS charges higher rates to borrowers than lenders receive (in most cases) Does the government think banks should stop paying interest to their depositers for the same reaso..... oh, they've been doing that for 10 years already now haven't they ?
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rhmc
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Post by rhmc on Apr 2, 2020 17:13:09 GMT
My interpretation is this would cover P2P - more from FCA here:
This guidance applies to regulated firms that issue personal loans. For the purposes of this guidance, personal loan refers to a regulated credit agreement, secured (other than on land) or unsecured, that is not a high-cost short term credit agreement, buy now pay later agreement, hire purchase agreement (including motor finance), credit card or overdraft. It also applies to firms that have acquired such loans.
This guidance applies in the exceptional circumstances arising out of coronavirus (Covid-19) and its impact on the financial situation of personal loan customers. The guidance is not intended to have any relevance in circumstances other than those related to coronavirus.
This guidance sets out our expectation that firms should provide, for a temporary period only, exceptional and immediate support to consumers facing payment difficulties due to circumstances arising out of coronavirus. It is intended to provide help to those who might be having temporary difficulty in making their personal loan payments due to a loss of or reduction in their income (or income of other members of their household) or to those who expect to experience such difficulties.
This guidance applies where consumers are already experiencing or reasonably expect to experience temporary payment difficulties as a result of coronavirus. Where a customer was in pre-existing financial difficulty, our existing forbearance rules and guidance in CONC would continue to apply. These would include for example the firm considering suspending, reducing, waiving or cancelling any further interest or charges, deferring payment of arrears or accepting token payments for a reasonable period of time.
We will review this guidance in the next 3 months in the light of developments regarding Covid-19 and may revise the guidance if appropriate.
This guidance builds on Principle 6 ('A firm must pay due regard to the interests of its customers and treat them fairly'). It sets out the FCA’s expectations for firms to provide coronavirus related support for customers who are experiencing or reasonably expect to experience temporary payment difficulties at the current time. When implementing this guidance, firms should take account of the particular needs of their vulnerable customers.
The guidance is potentially relevant to enforcement cases and the FCA may take it into account when considering whether it could reasonably have been understood or predicted at the time that the conduct in question fell below the standards required by Principle 6. Payment deferrals
In this guidance, ‘payment deferral’ means an arrangement under which a firm permits the customer to make no payments under their regulated credit agreement for a specified period without being considered to be in arrears.
Where a customer is already experiencing or reasonably expects to experience temporary payment difficulties as a result of circumstances relating to Covid-19, and wishes to receive a payment deferral, a firm should grant the customer a payment deferral for 3 months. An example of a situation in which a payment deferral may be appropriate is where there is or will be a reduction in household income that would have otherwise been used to make loan payments.
Firms can choose to make the enquiries they consider necessary in order to judge if a payment deferral serves the customer’s interests but there is no expectation under this guidance that the firm investigates the circumstances surrounding a request for a payment deferral.
Firms should make clear in their communications, including websites, that payment deferrals are available as set out in the circumstances described above. In addition, if, during an interaction between the firm and the customer, the customer provides information suggesting that the customer may be experiencing or could reasonably expect to experience temporary payment difficulties as a result of circumstances relating to coronavirus, the firm should ask whether the customer wishes it to consider granting a payment deferral.
Firms are not prevented from continuing to charge interest during the 3 month period. If the consumer is unable to resume payments at the end of this period because of payment difficulties at that time, they should contact the firm. The firm should work with the customer to resolve these difficulties in advance of payments being missed.
Where a customer who received a payment deferral as a result of circumstances relating to Covid-19 is entitled to forbearance under our existing rules then, as part of this, we expect any interest accrued during the 3 month period to be waived.
A firm may decide to put in place an option other than a 3 month payment deferral, if it is appropriate to do so in the individual circumstances of the case and the firm reasonably considers it needs to do this to treat the customer fairly. This could include a payment deferral of fewer than 3 months if, for example, the expected loss of income is for a shorter period, or accepting a sum below the normal payment due if, for example, the loss of income is partial. This guidance does not prevent firms from providing more favourable forms of assistance to the customer including a longer payment deferral if deemed appropriate.
A firm should give customers adequate information to understand the implications of a payment deferral, including the consequences of interest that is accrued during this period and its effect on the balance due under the agreement and on future payments.
Firms should ensure that there is no negative impact on the customer’s credit file because of the payment deferral. The payment deferrals described here should be regarded as being offered in exceptional circumstances outside of the customer’s control. In accordance with the relevant Steering Committee on Reciprocity (SCOR) Guidance, the account of the customer should not be recorded as having any form of detrimental arrears.
A customer should have no liability to pay any charge or fee in connection with the permitting of a payment deferral under this guidance.
Where statutory notice and statements are required to be sent under the CCA, firms should provide suitable explanations or context within these statutory notices and statements if they consider that they might otherwise lead to confusion. Firms will need to seek their own legal advice on matters relating to the CCA. Process and next steps
We want to act quickly to protect consumers in these difficult times. We consider that the delay involved in publishing a formal consultation accompanied by a cost benefit analysis would be prejudicial to the interests of consumers. We are therefore not doing so. There is no statutory requirement to prepare a cost benefit analysis in relation to guidance.
We are, however, giving stakeholders an opportunity to provide feedback on the draft guidance. We will consider any feedback before finalising it.
Consultation question: Do you have any comments on this draft guidance?
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Post by scepticalinvestor on Apr 2, 2020 18:04:01 GMT
Thanks rhmc , certainly looks like these directions will apply to RS as well.
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