Coronavirus Update 2 April: FCA orders no interest on credit cards, loans plus free £500 overdrafts

Good morning. From a personal finance perspective, the main story this morning is the new measures proposed by the Financial Conduct Authority. These mean banks and credit providers will charge no interest on credit cards or loans for three months if COVID-19 is causing you hardship.

The FCA has also told banks not to increase overdraft costs. They will also have to offer interest-free overdrafts of £500 for up to three months on an individual’s main account. You will be able to request this facility, even if you don’t have a current overdraft. Check your statements for interest on credit cards just in case.

The new measures should come into force on April 9th. Banks have until April 6^th to respond before the rules are made official.

In other business and finance related news:

• Business secretary Alok Sharma has warned lenders not to refuse emergency loans to good businesses in financial difficulty. Yesterday we reported on Coronavirus Business Interruption Loan problems faced by many firms.
• Nearly a million people have claimed Universal Credit benefits since 16 March. Many of the claimants include self-employed people whose work has dwindled or come to a halt. (For more information on help for the self-employed, see our coronavirus advice page).
• The Guardian also reports that millions of people could fall through the gaps of the government’s coronavirus support packages and benefits system. Of particular concern are people who have been self-employed for under a year or take most of their income from company dividends, not salary. Currently, relatively little help is available for these people.
• Former Bank of England governor, Mervyn King, has warned that an indefinite Coronavirus lockdown is unrealistic. He says that the government needs to work on an exit strategy. Lord King pointed to problems such as mental health issues and economic damage that are being caused by the lockdown.
• The British Chamber of Commerce says that nearly half of firms will furlough staff from next week. Sky also reports that firms are finding it difficult to wait weeks or months for the government job protection scheme money to come through.
• Finally, City AM reports that the UK manufacturing sector has suffered its worst slump since 2012. The coronavirus pandemic has not only caused demand to slump, but it has broken up supply chains.

That’s the end of today’s update. We’ll carry on keeping you informed of coronavirus-related news that is relevant to your business or finances. Please check back regularly.

In the meantime, if you need any help or advice from our accountancy team, please get in touch. We’d be very happy to help in any way we can.