StepChange responds to FCA’s report outlining treatment of borrowers in financial difficulty following pandemic

StepChange Debt Charity supports and recognises the themes picked up in today’s key findings report from the Financial Conduct Authority on borrowers in financial difficulty following the coronavirus pandemic. Many of the FCA’s findings reflect experiences reported by StepChange clients.

One of the points that the FCA’s report makes (at section 2.94) is:

“A further area where we observed wide variations in the approach towards training was how staff identified the need to signpost customers towards sources of debt advice. At one firm, we were pleased to note that staff were asked to do research into a debt advice or other helpful third-party service which borrowers in financial difficulty could benefit from. Having done this, they presented back their findings to the rest of the group. However, at other firms, it appeared that the need for agents to signpost customers towards debt advice services was simply a task which had to be completed during any conversation. This occurred without any consideration of whether this was appropriate, or any guidance given on how to explain the benefits to customers.”

There is a strong chime with the Mixed Messages research report recently published by StepChange and Amplified Global, which reported on how the ways that creditors communicate with people in financial difficulty can make a huge difference to outcomes. The variable approaches seen by the FCA are in line with StepChange clients’ variable experience of how their creditors communicated with them, and how well they prepared them and encouraged them for independent debt advice.

Peter Tutton, Head of Policy, Research and Public Affairs at StepChange Debt Charity, said:

“At a time when more people are likely to be feeling the financial pressure arising from the rising cost of living and higher interest rates, this is a timely reflection on how to adopt good practices that can really help customers in financial difficulty to get better outcomes.

“Fear and embarrassment can make people reluctant to engage with creditors when they are facing financial problems. The language, tone and presentation of communications can make a real difference here. Embedding good training and an understanding of how to help overcome these barriers is something very positive that firms can do to help their customers, and ensure that referrals to debt advice are also better understood and more effective.”