UK watchdogs to take action against ‘threatening’ debt collectors

UK financial regulators have published a joint letter that calls on companies to improve their debt collection practices, warning that they’d take ‘robust action’ against companies that are putting their customers mental health at risk.

The letter was signed by the City watchdog, the Financial Conduct Authority, the energy regulator Ofgem, the water regulator Ofwat and the communications watchdog Ofcom. They’ve discovered that companies across financial services, communications, water and energy industries need to improve their debt collection practices.

The regulators said, “Firms should be aware that customers in vulnerable circumstances may find it difficult to engage with creditors, and that their vulnerabilities may be exacerbated if creditors take an inappropriate approach to collections.”

The regulators consider bad practice to be:

• Using threatening or intimidating tones.
• Sending already vulnerable customers more letters, calls and emails about their debts than is necessary.
• The regulators also noted that some firms have made it hard for debt advisers to contact them with their client’s case.

All of these customers will be hit hard by the ongoing cost of living crisis, and even though some prices have fallen (like energy bills), they’re still much higher than they were two years ago before post-pandemic inflation and Russia’s invasion of Ukraine put pressure on bills.

This comes as a survey for campaign group Debt Justice found that 6.7 million people in the UK are in financial difficulty, with 8.1 million needing debt advice and half of UK adults affected by financial stress.

The regulators have warned that they’re prepared to use their powers, which could mean a fine for a company, if the companies didn’t meet expectations. 

 Need debt help?

Being in debt can be scary, especially if the company you’re in debt to are using any of the above methods to collect what you owe.

But you’re not alone, and we can help.

Our free debt advice is available to people all over the UK, online or over the phone. We’ll go through your finances in detail and explain your options. You might be surprised at the range of help available. We can:

• check you’re getting all the benefits you’re entitled to
• help you with budgeting
• advise you on debt solutions

 There are various debt solutions available that reduce your monthly debt repayments and even write off some of your debt. We’ll let you know if any of them are suitable for you. All our advice is free. Some debt solutions are free, while others come with a fee. We’ll give you all the information you need to make an informed decision and, if we recommend a debt solution and you decide to go ahead, we’ll help get it set up.