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FCA: “Significant” improvements needed in debt management provision

Both commercial and not-for-profit debt management providers need to make improvements in identifying vulnerable customers, according to a thematic review from the Financial Conduct Authority (FCA).

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Despite the significant improvements the regulator has called for, the latest review found that most customers are getting better advice and outcomes today than was previously the case.


However, while firms’ identification and treatment of vulnerable consumers are generally better than at the time of the first review in 2015, two-thirds of the firms that the FCA looked at still need to make improvements.


Along with identification and treatment of vulnerable customers, including consideration of how an individual’s vulnerability might affect the delivery and suitability of the debt advice, it also found a general need for firms to provide better advice to couples.


Some firms routinely failed to consider or discuss what debt solutions are available and suitable for each customer individually.


Two of the smaller firms reviewed by the FCA had unacceptably poor standards and practices. For example:

  • One firm failed to identify an 87-year-old widow on a 95-year debt management plan as vulnerable, despite her telling the firm several times that she had difficulty with technology and with figures and paperwork. The firm’s advisers talked over her, pushed her to sign documents online and refused to help her when she was clearly distressed
  • Another firm collected unaffordable payments from a vulnerable customer for six months, despite having been told that the customer was struggling financially and had had to give up work after being diagnosed with cancer.

The FCA has commenced supervisory action in these cases and opened an enforcement investigation in one case to date.


Jonathan Davidson, executive director of supervision, retail and authorisation, said: “It is vital that consumers who need help with their debts get quality advice and, if they enter into a debt management plan, that they can afford the payments. We are pleased to see the progress that debt management firms have made in becoming compliant. Those who have focused their culture on what is best for their customers, and not just on compliance, have made the biggest strides.


“But many firms have more to do, particularly for more vulnerable consumers, and we have also found that a small number still have unacceptable standards and practices – so we are taking action to stop this.”

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