Regulators combine to call on firms to help struggling customers
Summary
Following a roundtable meeting with Chancellor Jeremy Hunt the FCA has joined other regulators in calling on firms to support customers struggling with the increased cost of living and to keep prices fair. When supporting consumers in difficulty, the FCA says, firms should recognise that many will have multiple bills to pay. Consequently, firms need to be proactive in communicating the support available to consumers facing difficulties.
Speaking after the roundtable, FCA chief executive Nikhil Rathi said ‘We’re doing all we can to ensure that people who are struggling get the support they need. The FCA has worked with firms to deliver £47m in compensation to over 195,000 struggling customers. We’ve introduced rules which have saved almost £1bn in overdraft charges, and we’re working quickly to implement the commitments firms made on mortgages last week. We’ll take swift action if firms aren’t doing all they should to help people dealing with tighter household budgets.’
The FCA says it has reminded 3,500 lenders that it expects them to offer tailored support to borrowers facing financial difficulty. It has worked with around 100 lenders to improve how they treat customers, 17 of whom have agreed to pay out up to £47m in compensation to more than 195,000 customers.
The regulator has also outlined what mortgage lenders can do to help customers worried about keeping up payments and updated its rules to support commitments previously made by lenders. The FCA says its work on simplifying overdraft charges and tackle high fees for unauthorised overdrafts has saved UK consumers almost £1 billion. It has also warned banks to improve how they treat small business owners when collecting and recovering debts.
Insurers have been warned to protect customers, for example by not promoting unnecessary products or add-ons, avoiding unfair penalties, and ensuring consumers have access to fair value products. Debt advice providers have been banned from receiving referral fees from debt solution providers, saving consumers thousands of pounds in unnecessary fees and ensuring they receive better-quality advice.
The FCA has also challenged firms to ensure they treat customers fairly when setting savings rates. A new Consumer Duty will set the expectation that firms should be able to explain and justify their pricing decisions. This includes how quickly they raise savings rates and being able to demonstrate that rates offer fair value.