With a nod to Charles Dickens this holiday season, regulators in the UK suggest compassionate treatment for those unable to meet their credit responsibilities rather than the debtor prisons of old.
Regulators now propose plans to set struggling cardholders on 0% interest plans.
The Financial Conduct Authority (FCA) has published revised plans that would force lenders to reduce or cancel interest charges for people struggling to repay.
Customers should also be prompted to make faster repayments or be sent recommended repayment plans, the FCA said.
It expects savings would peak in the first few years of being in use at between £310m and £1.3bn.
Well, it is the holiday season. In the US, we use the Ability to Pay standard, which relies on customer input, but it works pretty well. This is a good alternative to the prisons of past buy you have to wonder what gets people in that condition. When the financial event is employment or medical, that is one thing. However, if it supports spending at Harrods, that is another!
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
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