Watchdog slams firms for not doing enough to help those who slip into debt

Hayley Kirton
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A third of firms the watchdog looked at were more fussed about getting their money quickly than seeking out the best outcome for customers (Source: Getty)

The City watchdog has today warned consumer credit firms could be doing more to help customers who find themselves falling behind on payments.

Although the Financial Conduct Authority (FCA) noted many businesses had improved their practices since it last looked into how early arrears were handled, there were still areas where more could be done.

In particular, the regulator noted only a handful of firms had focussed their culture on achieving fair outcomes for customers.

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Slightly less than two thirds of the firms examined had policies in place which were customer-centric but they were not always followed through by staff, and around a third of firms were more concerned with pinning down payments quickly, sometimes at the expense of getting a good result for customers.

"We found that firms who put customers at the heart of what they do saw the benefits of positively engaging with customers and agreeing sustainable repayment solutions," said Jonathan Davidson, executive director of supervision – retail and authorisations at the FCA.

"However, we found that firms whose culture was not motivated by securing fair customer outcomes were focused on securing payment as quickly as possible – which could mean delays, undue distress and the avoidable exacerbation of debts before customers with longer-term financial difficulties secured an appropriate repayment solution."

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The FCA has passed feedback to the firms involved in its study and has said it expects these businesses to take this information on board and adjust their practices accordingly.

Just under two-thirds (61 per cent) of individuals in Great Britain hold at least one consumer credit product, with around a quarter (26 per cent) having outstanding debt on such products. UK consumers owed £188.7bn on consumer credit products as of this September.

Welcoming the review, Mike O'Connor, chief executive of StepChange Debt Charity, said:

The FCA's evidence shows that the treatment of people in arrears is inconsistent across the sector and leaves people facing a lottery as to whether or not they will get the advice and support to help them get back on their feet.

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