FCA reminds lenders to help vulnerable customers 

As household bills are expected to continue to rise into the autumn, and as the Bank of England (BoE) warn inflation could reach 11%, the FCA have said “it is important that firms act now” to ensure vulnerable customers can access the help they need.

The FCA has examined how borrowers in financial difficulty are treated by lenders. Although it has found examples of lenders providing “the right support” to customers, it said most firms need “better conversations” to fully understand their customers’ individual circumstances.

Better comprehension would allow firms to provide tailored support, and to generate sustainable repayment arrangements.

The regulator found serious failings at more than 30 firms, largely in the consumer credit sector. It said it expected these firms to “make improvements”.

In its letter, the FCA is reminding lenders to support struggling borrowers through tailored support, and only charge fair fees that cover the firm’s costs.

Other points its letter raises is for firms to ensure their approach takes account of the financial pressure new borrowers face before taking them on, consider and improve how they treat vulnerable customers if necessary and effectively direct customers who need it to money guidance or free debt advice.

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.”