In one of the latest Dear CEO letters from the Financial Conduct Authority (“FCA”), the regulator reminded more than 3,500 lenders of the standards they should meet as consumers are affected by the rising cost of living. As household bills continue to rise into quarter 3 and 4 of 2022, the regulator pressed the importance for firms to act now to make sure borrowers struggling with payments and customers in vulnerable circumstances can access the help they need.
The FCA’s pressed the need for firms to have better conversations to fully understand their customers’ individual circumstances, so they can provide appropriate tailored support and ensure that arrangements to pay back debt are sustainable.
The regulator is also concerned that some customers in vulnerable circumstances are not getting the support they need as some lenders are not discussing the potential benefits of money guidance or free debt advice or helping and supporting borrowers to access these.
The FCA stated that they saw these concerns broadly across the sector. More serious failings were found at more than 30 firms, largely in the consumer credit sector. The FCA is reminding lenders that they should provide support to struggling borrowers which is tailored to their specific circumstances and only charge consumers fees which are fair and that cover the firm’s costs.
In its letter, the FCA is also telling lenders to:
- make sure that their approach to taking on new borrowers takes account of the financial pressure they may face and the impact on their expenditure.
- consider and, if necessary, improve how they treat consumers in vulnerable circumstances.
- effectively direct customers who need it to money guidance or free debt advice.