The city’s regulator said it found “serious failures” in some businesses to support struggling and vulnerable customers. As bills continue to rise, he told lenders to do more to help.
The Financial Conduct Authority (FCA) has written to more than 3,500 lenders, including retail banks, consumer finance companies and unregulated buy-it-now, pay-later providers, asking them to support borrowers who are affected by the rising cost of living.
He said that with spending expected to rise further in the fall, it was “important that businesses act now to ensure that borrowers struggling with payments and customers in vulnerable situations can access the help they need.”
The FCA said it found examples of lenders providing the right support to their customers, but added that “most businesses need to have better conversations to fully understand their customers’ individual circumstances in order to provide appropriate personalized support and ensure that the terms of debt repayment are sustainable”. .
He also raised concerns about the support vulnerable customers received, as he warned that not enough was being done. In addition, the FCA found that some lenders do not discuss the potential benefits of financial advice or free debt advice, nor do they refer borrowers to such support.
These concerns were seen across the industry, with more serious failures seen at more than 30 companies, primarily in the consumer finance sector. The FCA expects these companies to improve the way customers are treated.
He asked lenders to review and improve the way they deal with customers in vulnerable circumstances, direct people to free assistance and advice and ensure new borrowers consider financial pressure they might face. Also, they should only charge fees that are fair and cover business costs.
Sheldon Mills, executive director of consumer and competition at the FCA, said: “Many consumers are feeling the impact of the rising cost of living on their personal finances, and we expect this to increase over the course of the year. coming months. Early action is important for those struggling with debt. We need all companies to master the basics and provide good quality support. Where we see more serious wrongdoing, we are already taking action to ensure that these companies improve.
“The financial services industry has an important role to play in helping consumers manage their finances – and they should expect us to pay close attention to how they do so over the coming months.”
“Banks need to get their act together”
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Life isn’t going to get any easier this year – and for a lot of people it could get even tougher. Anyone who is already struggling to make ends meet and cover the cost of their loan may hit a brick wall as the year progresses. The FCA says banks need to pull themselves together and offer better support to struggling borrowers.
“When people can’t meet their debts, they often hide in the sand, so it’s up to the banks to make the effort to contact them and offer help. Banks need to up their game, but if you’re having trouble managing your debt, that shouldn’t stop you from reaching out and talking to them. They should help you find a solution that will cause far less damage to your credit rating than if you simply missed payments.
“If you can’t talk to them, get in touch with a charity, like StepChange, as soon as possible. They will explain all the options to you and often deal with the banks for you. debt, but while it may seem easier to hide from it in the short term, it only increases the pressure on you over time. Contact the experts and get help, and you can sort it out. problem together.