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The Analysis News & Opinions
Regulator writes to lenders on consumer treatment
The Financial Conduct Authority (FCA) has written to more than 3,500 lenders to remind them of the standards they should meet as consumers across the country are aff ected by the rising cost of living. With household bills expected to continue to
rise into the autumn, it is important that fi rms act now to make sure borrowers struggling with payments and customers in vulnerable circumstances can access the help they need. The
regulator’s wide-ranging work has
looked at how borrowers in fi nancial diffi culty are treated by lenders. It has found examples of lenders providing the right support to their customers. However, most fi rms need 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 FCA is also concerned that some cus- tomers in vulnerable
circumstances are not
getting the support they need. And some lenders are not discussing the potential benefi ts of money guidance or free debt advice or helping and supporting borrowers to access these. These concerns were seen broadly across the sector. More serious failings were found at more than 30 fi rms, largely in the consumer credit sector. The FCA expects these fi rms 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 specifi c circumstances and only charge them fees which are fair and that cover the fi rm’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 fi nancial pressure they may face and the impact on their expenditure. Consider and, if necessary, improve how they treat consumers in vulnerable circumstances. Eff ectively direct customers who need it to money guidance or free debt advice. People who are struggling to manage their fi nances should speak to their lenders for
8
support as early as they can. They can also get free support and advice, for example, through the MoneyHelper service. Executive director, Sheldon Mills, said: “Many consumers are
feeling the impact
of the rising cost of living in their personal fi nances and we expect this to increase over the next few months. Early action is important for those struggling with debt. We need all fi rms to get
the basics right and provide good
quality support. Where we see more serious wrongdoing, we are already acting to ensure these fi rms improve. “The fi nancial services industry has a
signifi cant role in helping consumers manage their fi nances – and it should expect us to pay close attention to how they do that over the next few months.”
Sheldon Mills
Enforcement update on debt advertising
The Advertising Standards Authority (ASA) has published a new Enforcement Notice about Debt
Management (IVA/PTD) Ads by
Insolvency Practitioners and Lead Generation Companies. The ASA has published several rulings about
ads which off ered consumers a way to write off debt in government approved schemes. These adverts were not placed by FCA- authorised debt advisers but by lead generation companies or insolvency practitioners, and ultimately advertised services for individual voluntary arrangements (IVAs) [in England, Wales, NI] or protected trust deeds (PTDs) [in Scotland]. The ASA found that adverts targeted at consumers with debt problems have the potential to cause serious detriment if they do not comply with the advertising rules. Insolvency practitioners and lead generation companies which ultimately advertise an IVA/ PTD service must be extremely careful to ensure their advertising is responsible and does not mislead.
www.CCRMagazine.com From Monday 25 July, the ASA Compliance
team will take targeted enforcement action to ensure a level-playing-fi eld, which may include – where advertisers are unwilling to comply – referral to Trading Standards or an appropri- ate recognised professional body. In summary, adverts must:
Clearly state the risks and fees involved. For lead generators, include a clear and prominent statement that they are a lead generation company which will pass on customer leads to third parties. Adverts must not:
Imply association or approval from government, debt
charities or regulated
advisory bodies. Claim that customers “can write off up to 85% of their debts” or similar in the absence of robust documentary evidence. Exaggerate the simplicity or speed of the process or claim that customers can “Lower your debt today” or similar. The Enforcement Notice goes into much further detail.
June 2022
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