FCA asks lenders to support customers struggling with cost of living

FCA asks lenders to support customers struggling with cost of living

The regulator said that with expenses set to increase further in the autumn, it was “important that firms act now to make sure borrowers struggling with payments and customers in vulnerable circumstances can access the help they need”. 

Work has been conducted to assess how borrowers in financial difficulties are treated by lenders, and examples of the right support were found but the regulator said that most firms needed to have better conversations with customers to gain an understanding of their circumstances. 

The FCA also raised concerns around the support that vulnerable customers were getting, as it warned not enough was being done. It also found that  some lenders do not discuss the potential benefits of money guidance or free debt advice, nor do they signpost borrowers to this support. 

It added: “These concerns were seen broadly across the sector. More serious failings were found at more than 30 firms, largely in the consumer credit sector. The FCA expects these firms to make improvements in how customers are treated.  

“The FCA is therefore reminding lenders that they should provide support to struggling borrowers which is tailored to their specific circumstances and only charge them fees which are fair and that cover the firm’s costs.” 

The FCA has asked lenders to consider and improve how they treat customers in vulnerable circumstances, direct people to free support and advise, and make sure new borrowers consider the financial pressure they may face. 

Sheldon Mills, executive director of consumers and competition at the FCA, said: “Many consumers are feeling the impact of the rising cost of living in their personal finances and we expect this to increase over the next few months. Early action is important for those struggling with debt. We need all firms to get the basics right and provide good quality support. Where we see more serious wrongdoing, we are already acting to ensure these firms improve. 

“The financial services industry has a significant role in helping consumers manage their finances – and it should expect us to pay close attention to how they do that over the next few months.”