Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will review the effectiveness of existing regulations relating to debt collection agencies for (a) vulnerable people and (b) financially insecure people.

The independent Financial Conduct Authority (FCA) is responsible for the regulation of debt collection activity. Where debt collection firms take steps to recover debts that have arisen under consumer credit agreements, they are required to do so according to the FCA’s principles, rules and guidance.

In particular, firms are required to treat customers fairly and to have policies in place for the fair and appropriate treatment of vulnerable customers. Additional requirements apply in relation to the recovery of debt from customers with mental capacity limitations.

The FCA has published guidance for firms on the fair treatment of vulnerable customers. In 2023-24, the FCA plans to evaluate the action firms have taken and whether we see improvements in the outcomes experienced by vulnerable consumers. The guidance can be found in the link below:

https://www.fca.org.uk/publications/finalised-guidance/guidance-firms-fair-treatment-vulnerable-customers

In addition, earlier this year the FCA wrote to all firms operating in this sector to set out their expectations of how firms should provide a higher standard of care to customers in the context of the Consumer Duty. The letter can be found in the link below:

https://www.fca.org.uk/publication/correspondence/consumer-duty-portfolio-letter-dpca.pdf

The Consumer Duty builds on the FCA’s guidance on the fair treatment of vulnerable customers – that sets out what firms should do to ensure that customers in vulnerable circumstances experience outcomes as good as those for other customers.  Falling below the standard set out in that guidance is likely to be a breach of the Consumer Duty.

There are no plans either by the Government or the FCA to review legislation or existing FCA requirements in this area. But the FCA will continue to monitor the activities of debt collection firms, including the steps they have taken to ensure they are compliant with the Consumer Duty, in accordance with their usual supervisory processes.