Debt management firms need to do more to improve the way they deal with customers – especially vulnerable ones.
That’s the verdict of city regulator Financial Conduct Authority after it took a look into what was going on.
"One firm failed to identify an 87-year-old widow on a 95-year debt management plan as vulnerable," the FCA said.
"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."
And that wasn’t all.
"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 regulator revealed.
The FCA has started supervisory action in response to both these cases, but found a number of firms with "unacceptable standards and practices".
There was some good news though. The FCA’s review found things have improved since 2015, and that most customers are now getting better advice.
But there’s work to do before the sector – where firms get paid to help you deal with debts – has a clean bill of health.
The FCA said while firms’ identification and treatment of vulnerable consumers is getting better, two-thirds of those that the FCA looked at still needed to make improvements.
The review also found a need for firms to give couples, or others seeking help together, better advice.
Some firms routinely failed to consider or discuss what debt solutions are available and suitable for each customer individually, the FCA said.
Jonathan Davidson, FCA executive director of supervision, retail and authorisation said: "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."
Tips for survival when you’re in the red
If you’re struggling to keep up with your bills and commitments, first contact a free debt advice charity like StepChange rather than borrow more to try and cope.
Keep your finances on track more easily by making a budget. Create two simple columns – in and out – to show exactly what you have coming in and what you have to pay out. Or use an online tool such as moneyadviceservice.org.uk/en/tools/budget-planner . Consider whether a money management app could help you
stay in control.
If your debts have become unmanageable, get free, independent debt advice. Different solutions are right for different people. You can use an online service such as stepchange.org/DebtRemedy if you are more comfortable doing this than speaking to someone on the phone. You can also call 0800 138 1111. Contact your local Citizens Advice or call the National Debtline on 0808 808 4000.
We’ve also got a guide on how to deal with debt, here .
Pay off your debts
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