UK financial firms pay £12m compensation after FCA warning

The Financial Conduct Authority (FCA) has told 32 firms to make changes to improve the way they support customers in financial difficulty.

The move has so far prompted seven of the lenders to voluntarily agree to pay £12 million in compensation to nearly 60,000 customers.

The UK regulator says that it expects lenders to “learn the lessons from good and poor practice during the coronavirus pandemic” to help borrowers during the cost-of-living crisis.

The FCA said it will also be closely reviewing a further 40 firms in the coming months to make sure they are meeting its expectations and to protect customers from harm.

The news follows the release of new research by the FCA, which found that only 30 per cent of firms it reviewed sufficiently explored customer’s specific circumstances, which meant repayment agreements were often unaffordable and unsustainable.

Sheldon Mills, executive director of consumers and competition at the FCA, said: “While many firms did well in supporting customers in difficulties during the pandemic, with our support and guidance, others sadly failed their customers.”

He added: “We will take action to restrict or stop firms from lending to people if they fail to meet our requirements that consumers in financial difficulties should be treated fairly.”

The authority has urged firms to encourage consumers to engage earlier when facing financial difficulties, offer tailored support, and let those struggling know about the availability of free and independent debt advice.

It also called on financial services providers to make sure their fees and charges are “fair” and only reflect “reasonable costs”.

The move comes weeks after the FCA wrote to insurance company chief executives asking them to make sure their customers are protected from unfair penalties and “unnecessary” products or add-ons during the cost of living crisis.

    Share Story:

Recent Stories


Safeguarding economies: DNFBPs' role in AML and CTF compliance explained
Join FStech editor Jonathan Easton, NICE Actimize's Adam McLaughlin and Graham Mackenzie of the Law Society of Scotland as they look at the role Designated Non-Financial Businesses and Professions (DNFBPs) play in the financial sector, and the challenges they face in complying with anti-money laundering and counter-terrorist financing regulations.

Ransomware and beyond: Enhancing cyber threat awareness in the financial sector
Join FStech editor Jonathan Easton and Proofpoint cybersecurity strategist Matt Cooke as they discuss the findings of the State of the Phish 2023 report, diving into key topics such as awareness of cyber threats, the sophisticated techniques being used by criminals to target the financial sector, and how financial institutions can take a proactive approach to educating both their employees and their customers.

Click here to read the 2023 State of the Phish report from Proofpoint.

Cracking down on fraud
In this webinar a panel of expert speakers explored the ways in which high-volume PSPs and FinTechs are preventing fraud while providing a seamless customer experience.

Future of Planning, Budgeting, Forecasting, and Reporting
Sage Intacct is excited to present FSN The Modern Finance Forum’s “Future of Planning, Budgeting, Forecasting, and Reporting Global Survey 2022” results. With participation from 450 companies around the globe, the survey results highlight how organisations are developing their core financial processes by 2030.