Here, too, similar questions arise with respect to credit card rates as for payment leave. Credit cards derive much of their income from their net interest margin; and prices are determined in the context of a number of complex factors such as the risk of failure, competition and the availability of promotional prices. The proposal to reduce interest rates as an isolated solution and not as one of the options and instruments available to lenders to help clients in temporary or longer-term financial difficulties is too simple and could pose problems in the future, the most obvious being to find the answer to the question of when it is “right” to raise interest rates again; and, of course, how companies mitigate the impact on their own financial situation, violations of co-branding agreements and perhaps even investor alliances. One of the main objectives of the 1974 CCA and one of the main objectives of the CFA is consumer protection. At least in theory, one way to ensure consumer protection is to provide additional legal/regulatory protection, by establishing strict rules on the form and content of agreements falling and avoiding the simplistic approach of the ACF, as this may lead to complaints and a “leniency” review in the future. One of the thoughts is how to identify and treat “vulnerable” clients and continue to support borrowers who are already treated with leniency. The FCA is aware that if a client is a person entitled to be treated leniently under the normal rules of the ACF, the interest that could normally be incurred during the payment leave should be removed. Interest rate exemptions are generally not granted to borrowers under fixed loan contracts, even as a leniency measure. Repayment plans and short counts are more common. This is because interest was calculated in advance and added to the loan from the outset, so the systems are simply not designed to apply requests to cancel medium-term interest rates. If this requirement applies to pre-determined fixed-rate loans, this will be a real problem for lenders. It should be remembered that, in accordance with Section 82 (2) CCA, where an agreement differs or completes a previous agreement, the amendment agreement must be dealt with in such a way as to appeal to the previous agreement and contain provisions that reflect the combined effects of the two agreements.
A new regulated modification contract must be signed by the customer, pre-contract information must be provided and form and content requirements must be met. At the best of times, it is incompatible with business standards and an increasingly digital society, but in the current circumstances, it is totally unrealistic. If new credit contracts are the preferred option, careful consideration should be given to the basis on which they are concluded and the processes that surround them. If these new agreements involve the repayment of existing agreements and their longer-term refinancing, they may require different editorial treatment under the Consumer Credit Act (CCA), which develops the rules for developing agreements that lenders have already developed.