The Treasury Committee has published a copy of a letter from FCA answering its questions on the economic impact of Covid-19. The letter explains:
- the steps FCA has taken to ensure the credit ratings of customers taking advantage of temporary reliefs are not impacted – but noting that other factors during the Covid-19 period may genuinely influence credit ratings, such as where customers require additional forbearance;
- how FCA has made clear that deferrals may not be in the interests of all customers and that it is critical that customers agree with lenders the appropriate way to pay back the amount owed following a payment holiday. FCA does expect the group of people struggling with their finances to grow significantly and will work on supporting these consumers;
- what FCA has done to stress to unregulated firms who have taken over mortgage portfolios that it expects them to follow FCA’s guidance, and how it is monitoring the update of payment holidays and forbearance measures;
- that FCA is keeping under review how firms are deciding when to offer deferrals and what they are doing to judge if payment holidays are in the best interests of customers;
- that FCA will be reviewing its measures after the initial 3 month period to assess what is the appropriate next stage;
- that, with the motor and high cost finance measures most recently introduced there are no immediate plans for more measures, but recognising the need for monitoring the longer term impacts of the virus on society; and
- that the work of the new Small Business Unit will be assessing whether additional protections and support are needed for SMEs, and what it is doing to try to ensure small businesses are getting the best advice on available loans. Again, FCA is gathering data on what small firms are needing and what support their lenders are giving them.