Financial service companies have been told by their industry’s chief regulator that they need to do more to provide support to customers who are struggling with debt.
The Financial Conduct Authority (FCA) has drafted a series of best practice guidelines making clear that it wants companies to recognise more readily when their customers are in difficulty and to focus on actively helping them rather than adding to their problems.
The FCA has said that while some lenders deal carefully and properly with customers in trouble, others don’t even consider whether their borrowers are vulnerable or not, or they actively seek to exploit those vulnerabilities for their own financial gain.
It is estimated that more than 24 million people across the UK show one or more sign of being in a position of material vulnerability, with coronavirus having worsened the financial circumstances of many hundreds of thousands of Brits in recent months.
A key part of what the FCA wants to see from financial services providers is an ability to recognise when their customers are struggling and a willingness to provide support to people in those situations.
Beyond that, companies are also being asked to understand the value of sympathy in these contexts, to empower their staff to help people more directly and to appreciate that some vulnerable customers will have specific communications needs that ought to be recognised.
“Supporting vulnerable consumers is a key focus for the FCA, and the coronavirus crisis has only highlighted its importance,” said Christopher Woolard, the FCA’s interim chief executive.
“While many firms do excellent work to support their vulnerable customers, we will not hesitate to step in where others do not.”
Responding to the FCA’s draft best practice guidelines, Peter Tutton from the debt help charity StepChange agreed that coronavirus has sharply increased the number of people with problem debts but insisted that the government needs take the lead in helping those who are struggling the most.
“For the most vulnerable in our society currently struggling with rent, council tax or bailiff enforcement, the months ahead are filled with uncertainty - the government must ensure the safety nets are in place to help them,” he said.
Millions of low-income households across the UK are being dragged down by debts they accumulated during the pandemic.
People with debt problems should not be afraid to confront the realities of their circumstances and tackle them head on, according to the expert money adviser Martin Lewis.
Our Scottish based team can help advise you on your debt problems.