LONDON (Reuters) - Firms that help people manage debt repayments are failing to make regular checks on customers and could be fined, Britain’s financial watchdog said on Thursday.
The Financial Conduct Authority (FCA) said it has sent a “Dear CEO” letter to the heads of debt management firms in the UK that help people struggling with several debts to consolidate repayment under a single plan.
Dear CEO letters have often been a final warning before the watchdog takes action, such as making rules stricter or fining firms.
The FCA said in the letter published on its website that it had found examples of non-compliance with its requirements for administering debt plans.
“We take the failure to comply with any of these requirements seriously and non-compliance will lead us to take appropriate action,” the letter from the FCA’s director of retail supervision, Jonathan Davidson, said.
Such firms, usually small private companies, take the customer’s repayment and distribute it among those owed money. The firms must review a debt plan at least once a year and keep in touch with customers to ensure they are getting the best advice for their circumstances.
The watchdog has found that some firms have allowed the plans to run for years without a proper review, meaning a customer’s circumstances may have changed significantly.
Last week the Bank of England said in its twice-yearly financial stability report that household indebtedness in Britain remains high by historical standards.
Reporting by Huw Jones; Editing by Susan Fenton