FCA: Banks aren’t offering struggling borrowers enough support
The FCA says lenders need to work harder to understand the problems people are facing, so they can offer the right support. They’re worried that vulnerable borrowers aren’t getting the right help.
And that banks aren’t 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 offer to people struggling with debts as prices rise.
The FCA published details of the letter to lenders: FCA tells lenders to support consumers struggling with the cost of living | FCA
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “Life isn’t 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. The FCA says banks need to get their act together and offer better support to borrowers who are struggling.
Bank of England figures showed that in the first 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 inflation 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 significantly.
When people can’t cope with their debts, they often bury their head in the sand, so it’s up to the banks to make the effort to contact them and offer help. The FCA says some banks aren’t doing enough on this front.
When they do reach customers, they need to work harder to appreciate their circumstances, so they can offer support that’s actually going to make a difference. It says that too many are setting up repayment plans that people have no hope of being able to afford. 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 find a way to support them.
Lenders shouldn’t be charging more in fees than it actually costs the business, and the FCA found that some were applying charges inconsistently, and in a way that risked making everything even worse for their customers.
Banks need to up their game, but if you’re having trouble managing your debts, it shouldn’t put you off getting in touch and talking to them. They should help you find a solution, which will do far less damage to your credit rating than if you just miss payments.
If you can’t face speaking to them, get in touch with a debt charity, like StepChange, as soon as possible. They’ll talk you through all the options, and will often deal with the banks for you. It’s not easy to face up to debt problems, but while it may feel easier to hide from it in the short term, it just piles the pressure on you even more as time goes on. Get in touch with the experts and get some help, and you can sort the problem together.”