Lenders ‘must be more compassionate to people in debt’

The head of the Financial Ombudsman Service (FOS) has urged lenders to be more compassionate to customers struggling with debt.

According to FOS chief executive Abby Thomas, many people in debt often don’t get a chance to engage with financial companies before the debt collection process starts.

This, she said, has led to customers “feeling harassed” and affected their mental health.

Ms Thomas has suggested that businesses should instead take a “tailored” approach to finding out why certain people are struggling with debt.

This would involve training staff to listen, empathise and ask customers what help they might need, as well as pointing them towards suitable support agencies.

Customer experience ‘falling short’

“There are so many well-established rules and guidelines that are designed specifically to help financial businesses find ways of supporting their customers when the need arises,” Ms Thomas said.

“But despite this, we’re still seeing cases where customer experience has fallen far short of what it should have been.”

Between April and June this year, the FOS received 74,645 complaints from customers about financial firms. 

This was 70% higher than the number recorded in the same period of 2023 and was heavily driven by complaints about credit cards.

In fact, the FOS received 18,175 complaints about credit cards during this single three-month period.

“It’s concerning to see such large volumes of complaints, particularly when they relate to irresponsible and unaffordable lending,” Ms Thomas said.  

She added that businesses must be “open and transparent” with their customers and treat them “fairly and with empathy”.