Banks in the UK Offer Repayment Holidays To Customers Impacted By Coronavirus
11 Mar 2020
Approx Reading time: 4 minutes
- Many high street banks, including RBS, TSB, and Lloyds have announced policies to help coronavirus-impacted customers mitigate growing financial issues.
- Policies include repayment holidays on mortgage and loan products, temporary increase in credit card limits, and waivers on fees charged on early withdrawals from fixed savings accounts.
- Banks have also pledged individual support for customers especially impacted by the financial impact of the virus.
Banks in the UK, including the Royal Bank of Scotland, TSB, as well as Lloyds, have decided to allow repayment holidays to their customers of both mortgage and loan facilities. The move has been made to offer some relief to customers deeply impacted by the ongoing coronavirus global pandemic. By enacting such policies, UK banks are effectively preparing for a potential surge in credit defaults by customers who may have to forgo on regular income due to self-isolation or change in compensation provided by the employer. Earlier this week, the Italian government placed the entire country of Italy under lockdown
to control the exponential spread of coronavirus in the country. The government also announced that all mortgage repayments in the country were being suspended as part of emergency measures to deal with the virus. In the UK, many banks have been providing emergency loans to business owners for the past few weeks. But now, steps are being taken to address the adverse impact of the virus on individual borrowers as well, considering the number of coronavirus cases continues to rise in the country. According to the RBS Group, the repayment holiday is expected to remain in place for the next 3 months to help customers impacted by the virus. The Group also said customers would be able to temporarily increase the limits on their credit cards and also have access to cash deposited in fixed savings accounts while charging no fees for early closures. Fees that are applicable to cash advances on credit cards are also being scrapped, while the cash withdrawal limit is expected to increase up to £500 for RBS customers. According to an RBS spokeswoman, each customer case would be evaluated individually to assess the support the bank can provide to help them navigate through the financial challenges posed by the coronavirus. Similar relief policies have been implemented by some other major banks in the country as a week, including the Lloyds Banking Group and TSB. According to the TSB, customers would have the option to apply for and access a mortgage holiday for a period of 2 months, emergency increases on their credit limits, and access to funds deposited fixed accounts and bonds without paying any charges. Lloyds, on the other hand, has also announced deferment of mortgage and loan repayments and access to cash deposited in fixed savings accounts. Lloyds customers would also not be charged any missed payment fees on their credit card debt, and have the facility to submit deposit cheques with a higher amount through its digital scanning option in case they are unable to access any of its branches. According to Vim Maru, who heads retail operations at Lloyds Group, these changes have been made on a temporary basis to deal with the evolving situation in the coming weeks. Maru also said that individual customers who are in need of special assistance would be provided dedicated support by the banks in the Group. Other lenders in the UK are also offering assistance. Barclays has provided access to specialist teams for customer support and removed any penalties enacted on early withdrawals from fixed savings accounts. Barclays customers would also have the option to increase limits on their credit cards on a temporary basis. Some banks, including Metro and Santander, have pledged to review cases on an individual basis. On Monday, RBS announced it had put aside a total of £5 billion
to provide as emergency loans to small businesses that may need them, while also scrapping borrowing fees for the same. Lloyds pledged £2 billion for SMEs with the same intention, and also said it would consider cases for repayment holidays where companies have been badly affected by the virus. According to experts, customers should take advantage of such policies and seek relief for their deteriorating financial situation as early as possible, as delaying such requests could potentially result in worse financial constraints.