Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of waiving the limitation on the number of payment holidays to credit providers that people can apply for in response to the prolonged economic effect of the covid-19 outbreak.

In November 2020, the Financial Conduct Authority (FCA) extended its guidance on mortgage and consumer credit payment holidays. This allows borrowers to apply for up to six months of payment holidays until 31 March 2021, with all payment holidays under this guidance ending by 31 July 2021. These measures have provided consumers with a much-needed respite period, giving time to smooth out finances that may have taken a hit by the pandemic.

The Government and FCA have been clear from the start that this guidance should only be a temporary solution for those borrowers facing short-term financial difficulties as a result of COVID-19. For borrowers needing ongoing support beyond six months, the FCA’s business-as-usual rules require that lenders provide tailored forbearance for the specific needs of the borrower. The tools available to lenders under these rules include suspending, reducing or waiving interest, fees or charges as well as offering further payment holidays if agreed between the borrower and lender.