The UK’s Financial Conduct Authority (FCA) has told banks they must treat small business customers fairly when collecting and recovering debts. The move comes as part of the regulator’s work in response to the increasing cost of living.
The FCA conducted a review of 11 banks and their collection practices, saying it identified “a number of issues”, including:
- Lenders did not treat small businesses fairly when they try to agree with a sustainable payment plan – for example, arranging payment plans which are clearly unaffordable based on the information provided by the customer.
- Staff does not have the right training to provide effective support to customers and make fair decisions about cases.
- Lenders do not have clear policies to help staff identify and support vulnerable customers – meaning these customers may be missing out on the support they need.
- Not having quality assurance and testing for their processes to ensure that they deliver fair results for consumers – can mean problems going undetected.
The FCA says that while it has provided feedback to the individual firms reviewed, it expects “to see the whole sector take action”.
It adds that it has written to the chairs of all retail banks with small business customers to ensure they meet the FCA’s expectations, or to inform the regulator if they are unable to do so.
“People across the country will be affected by the rising cost of living – and this includes small businesses,” says Sheldon Mills, the FCA’s executive director for consumers and competition.
“We were disappointed to find repeated instances of these customers not being treated fairly by banks when they’re struggling. We expect the whole sector to act quickly to improve this. We will take action if problems continue.”