Earlier this month the Financial Conduct Authority (FCA) recently published a Dear CEO letter encouraging lenders to support their customers through the current cost of living crisis.
More than 3,500 lenders, including retail banks and consumer credit firms, have received
the letter in which they are reminded of the expected standards they should meet whilst consumers across the country are hit by the current cost of living crisis.
An estimated 27% of the population has low financial resilience, a figure only likely to increase in the coming months. It is the poorest and most vulnerable households however who are likely to be the hardest hit by the rising living costs. The effect on these households is not just financial either, as they can face both physical and mental health pressures.
The regulator is therefore keen to ensure that firms understand the FCA's expectations of them towards their customers, and for them to act now to make sure borrowers struggling with payments or those in vulnerable circumstances can access the help they need. In addition these borrowers should only be charged fees which are fair and that cover the firm’s costs.
Further expectations of lenders include:
Providing customers with an appropriate level of care and support
Effectively directing customers who need it to money guidance or free debt advice.
Ensuring lenders take account of the financial pressure new borrowers may be facing and the impact on their expenditure.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, commented:
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.
Read the Dear CEO letter here