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Debts

Answer

The Government expects fair treatment of individuals in debt and recognises the important role of responsible practices for debt recovery. We likewise recognise the negative impact that aggressive pursuit of debt can have on individuals.

For financial services debts, such as a bank loan, the Financial Conduct Authority (FCA) requires firms to treat their customers fairly and offer a range of appropriate forbearance options. Debt collection firms must also follow FCA rules when collecting financial services debts, and the FCA has a broad enforcement toolkit to penalise firms which breach them.

More broadly, the FCA requires that consumer credit firms provide credit in responsible manner. Under FCA rules, firms must assess a potential borrower’s creditworthiness before extending credit to them. Firms must also only offer credit that is suitable for a potential borrower’s needs and circumstances and ensure that the credit does not lead to over-indebtedness.

The Government remains committed to improving debt collection practices across sectors. In March 2024, the FCA published a joint letter alongside Ofgem, Ofwat, and Ofcom setting out their shared expectations for how firms should support customers in financial difficulty and rules governing this in their respective sectors.

Secondary information

Type

Written question

Reference

37282

Session

2024-26

Subjects

Debts Financial institutions Regulation Overcharging

Link

View this Written question on www.parliament.uk