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Consumer Credit
FCA: Banks are not off ering struggling borrowers enough
Regulator puts the empahasis on the need to provide real and eff ective support
Sarah Coles senior personal fi nance analyst, Hargreaves Lansdown
The FCA says lenders need to work harder to understand the problems people are facing, so they can off er the right support. They are worried that vulnerable borrowers are not getting the right help. And that banks are not doing enough to encourage people to speak to debt charities or the Money Helper services. The FCA has written to lenders to remind them of the support they should off er to people struggling with debts as prices rise. The FCA published details of the letter to lenders in ‘FCA tells lenders to support consumers struggling with the cost of living – FCA’.
No easier Life is not going to get any easier this year – and for many people it could get even harder. Anyone who is already struggling to make ends meet, and cover the cost of their
Life is not going to get any easier this year – and for many people it could get even harder. Anyone who is already struggling to make ends meet, and cover the cost of their borrowing, risks hitting a brick wall as the year goes on
borrowing, risks hitting a brick wall as the year goes on. The FCA says banks need to get their act together and off er better support to borrowers who are struggling.
Bank of England Bank of England fi gures showed that in the fi rst three months of this year the number of people behind on unsecured debts, like credit cards and loans, and the number who were behind on the mortgage actually fell. However, banks expected both to rise in the spring as infl ation ramped up. The fact that prices are expected to rise
even further as we go through the rest of the year means the number of people falling behind could rise signifi cantly.
Cannot cope
When people cannot cope with their debts, they often bury their head in the sand, so it is up to the banks to make the eff ort to contact them and off er help. The FCA says some banks are not doing enough on this front. When they do reach customers, they
need to work harder to appreciate their circumstances, so they can off er support that is actually going to make a diff erence. It says that too many are now setting up
repayment plans that people have no hope of being able to aff ord. Some are also failing to appreciate the needs of vulnerable customers, who may need more help. The FCA says banks need to train staff , so
they can understand people’s problems and fi nd a way to support them.
Fees
Lenders shouldn’t be charging more in fees than it actually costs the business, and the FCA found that some were applying charges
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www.CCRMagazine.com June 2022
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