City watchdog asks lenders to support customers with the cost of living and debt

If you are struggling with bill payments or think you are falling into debt, then it is vital that you speak to your provider as soon as possible, especially after the regular has said they must do more to help customers during the cost of living crisis. 

In a letter to 3,500 lenders, which includes banks, consumer credit firms and even buy now, pay later (BNPL) firms, the Financial Conduct Authority (FCA) has asked them to ensure they have measures in place to support vulnerable customers and provide them with support as the cost of living crisis takes hold.

Although not all BNPL firms are currently regulated, the FCA said it hopes the letter will encourage these firms to provide their customers with an appropriate level of care and support.

With rising energy, food and fuel prices, more households are falling into difficulty and may need extra support.

The FCA has asked that lenders have conversations with borrowers to understand their difficulties,  provide tailored support and offer repayment plans that are sustainable.

It has also asked lenders to give vulnerable customers better guidance on money management or free debt advice.

The FCA found that more than 30 firms, specifically in the consumer credit sector, were not doing enough and expects them to make improvements - this includes fairer fees and better treatment.

What has the FCA told lenders? 

The letter, sent out on 16 June, the FCA told lenders to: 

• Before they lend money, they must consider the financial pressures borrowers already have
• They must improve how they treat consumers in vulnerable circumstances
• They must effectively direct customers who need it to money guidance or free debt advice

People who are struggling to manage their finances should speak to their lenders for support as early as they can. They can also get free support and advice, for example, through the MoneyHelper (opens in new tab) service.

Sheldon Mills, executive director of consumers and competition at the FCA, said: “Early action is important for those struggling with debt. We need all firms to get the basics right and provide good quality support. 

“The financial services industry has a significant role in helping consumers manage their finances – and it should expect us to pay close attention to how they do that over the next few months.”