The Financial Conduct Authority has refused to authorise debt management firm PDHL and has written to its 16,000 customers.
The Financial Conduct Authority has refused to authorise debt management firm PDHL and has written to its 16,000 customers.
The firm has been operating with interim permissions since the FCA took over from the Office of Fair Trading on 1 April 2014 but can now no longer carry out regulated debt management activities.
The FCA said PDHL was misadvising and mistreating customers and its systems and controls were inadequate.
Jonathan Davidson, FCA director of supervision, retail and authorisations, said: “Poor debt advice can lead to consumers trying to make payments on their debt that they cannot afford which is particularly serious for those in vulnerable circumstances and why we have paid very close attention to the advice given to consumers by debt management firms.
“As part of our authorisation process, all firms must demonstrate that they have customers’ interests at the heart of their business.”
One PDHL customer informed the firm they had lost their job but PDHL failed to review the case for two months. When it finally looked at the case it refused the customer’s request to reduce the minimum £30 payment. Another customer with negative disposable income agreed to keep paying the minimum payment under their debt management plan on the basis they would borrow money from their mother.
In both cases the debt management plans failed anyway as the customers stopped making payments within three months.
There are approximately 400,000 people on commercial debt management plans in the UK.
The FCA has previously warned against the “high risk” debt management sector as it said firms “would need to raise their game”.
In a thematic review published in June 2015 it found that firms were not meeting the standards expected.
More than 100 firms have left the market since applications closed for debt management authorisation in February 2015.
