The UK’s financial regulator on Thursday warned UK lenders to make a greater effort help borrowers struggling amid the cost-of-living crisis, including offering payment holidays and waiving interest for those most at-risk.
In a letter to more than 3,500 lenders across the industry, the Financial Conduct Authority (FCA) demand firms respond “flexibly” and support customers beyond just scheduling collections for missed payments.
“Firms should ensure their policies and processes are fit for the current cost of living pressures and are fully prepared with experienced management and staff to cope with the potential increasing numbers of borrowers in financial difficulty,” the FCA said.
It warned that it was conducting regular checks to see whether lenders have been treating struggling customers fairly, and had found “more serious failings” at 34 unnamed firms.
“The FCA expects these firms to make improvements in how customers are treated,” the regulator said.
It recommended lenders consider accepting reduced loan repayments, waiving or freezing interest, and extending the terms of customer loans, for those facing financial difficulty..
FCA executive director for consumers and competition Sheldon Mills said lenders should expect the watchdog “to pay close attention to how they do that over the next few months”.