The UK’s top financial watchdog has written to UK lenders today urging them to “act now” to ensure they can protect consumers amidst a cost of living crunch this year.
In a letter to more than 3,500 chief executives, including major banks and buy-now pay-later providers, the Financial Conduct Authority said it is crucial they provide support to borrowers and ensure adequate support is in place and vulnerable customer can access support.
The FCA said that firms should consider measures such as freezing interest payment and reducing loan repayments to ease the burden on vulnerable borrowers as they grapple with soaring costs this year.
“Many consumers will feel the impact in their personal finances, but we are particularly concerned that consumers least able to bear the rises will be hardest hit,” Sheldon Mills, executive Director of the FCA wrote.
“While the headline average inflation rate is at 9% and rising, the Institute of Fiscal Studies estimates that the poorest households may face average inflation rates as high as 14 per cent.”
Mills urged firms to implement measures including providing “customers with an appropriate level of care and support” and giving support to borrowers “showing signs of financial difficulty or struggling with debt”.
The warnings come after the watchdog said it had found “serious failings” at more than 30 firms following a review of lenders, with failings largely coming in the consumer credit sector.
The FCA said it now expects these firms to make improvements in how customers are treated.
Although not all buy-now pay-later products are currently regulated, the letter was also sent to unauthorised BNPL providers to encourage these firms to provide their customers with an appropriate level of care and support.