FCA publishes portfolio letter to debt purchasers, debt collectors and debt administrators

On 18 January 2021, the FCA published a ‘portfolio letter’ to debt purchasers, debt collectors and debt administrators.

The FCA identified seven key ways in which consumers may be harmed:

– firms failing to recognise and address the needs and challenges facing vulnerable consumers and failing to ensure they obtain the same fair outcomes as other consumers;

– consumers’ needs not being adequately assessed meaning consumers may not receive appropriate forbearance;

– consumers not receiving clear information about, or resolution to, their dispute or complaint and being incorrectly pursued for debts;

– firms taking disproportionate action when seeking to pursue a judgment (for example, seeking judgment where a consumer is vulnerable);

– firms continuing to seek or accept payments on extinguished debts; and

– firms exhausting all available resources, failing to meet its obligations and existing the market in a disorderly fashion.

The FCA said it will focus its work on:

– firms’ treatment of customers (particularly on vulnerable customers, forbearance and due consideration and disputed debts);

– firms pursuing litigation and unenforceable debts; and

– firms’ prudential resources.

The FCA has also reminded firms that when making a notification under Principle 11, firms should be aware of the requirements and guidance in SUP 15. These are important provisions which say, for example, that a notification should be made where there is a “significant” breach of the Consumer Credit Act 1974 and its regulations. The FCA also usefully gives some guidance on the types of situations where it expects to receive a notification.