On 18 March 2024, the UK Financial Conduct Authority published a news story calling on firms to improve debt collection practices. All of the regulators feel that this is particularly important given many consumers continue to feel cost of living pressures.
The news story also includes links to:
– a joint press release; and
– a copy of the joint letter dated 18 March 2024.
This joint letter follows on from a letter published on 28 June 2023 (see the press release and the joint letter dated 28 June 2023).
The latest joint letter makes the following points for financial services firms:
– firms should start from the position that customers in collections are highly likely to have characteristics of vulnerability and should follow FCA’s expectations under the consumer duty (including its finalised guidance) and its vulnerable customer guidance;
– the consumer duty strengthens existing requirements;
– there is foreseeable harm if a debt collection communication sent the customers are perceived to be intimidating or unsupportive (and communications should be tested)
– firms may want to encourage ‘warm’ handovers between frontline and specialist teams; and
– the FCA aims to publish its policy statement before June 2024 on its response to Consultation Paper 23/13.
The FCA reminds financial services firms (and this point should not come as any surprise) that debt collection rules and guidance apply to both debt collectors and to lenders taking steps to recover payments due under credit agreements or consumer hire agreements.