"We will take action if problems continue"
The Financial Conduct Authority (FCA) has told banks to treat small business customers fairly when collecting and recovering debts, particularly at this time of increasing costs of living.
The FCA issued the statement following a review of 11 firms’ practices, which resulted in the detection of a number of issues.
The financial regulatory body found that lenders are not treating small businesses fairly when they try to agree a sustainable payment plan – for example, arranging payment plans which are clearly unaffordable based on the information provided by the customer.
It also discovered that the banks’ staff often did not having the right training to provide effective support to customers and make fair decisions about cases.
The FCA also said that lenders do not have clear policies to help staff identify and support vulnerable customers, meaning these customers may be missing out on the support they need. Another problem that the FCA has detected is lenders not having quality assurance and testing for their processes to ensure that they deliver fair results for consumers.
The FCA said it has already provided feedback to the individual firms it reviewed, but it wants to see the whole sector take action too.
The regulatory body has written to the chairs of all retail banks with small business customers, urging the boards of these banks to ensure that they are meeting the FCA’s expectations and to inform the regulator if they are unable to do so.
Sheldon Mills, the FCA’s executive director for consumers and competition, said they were disappointed to find repeated instances of customers not being treated fairly by banks when they’re struggling.
“We expect the whole sector to act quickly to improve this. We will take action if problems continue,” Mills stressed.