UK lenders to pay up to £47m to borrowers in difficulty

17 UK-based lenders have agreed to pay up to £47m to more than 195,000 borrowers in difficulty following intervention by the Financial Conduct Authority (FCA).

This follows a series of discussions between the City regulator and almost 100 lenders which focused on making improvements to the way that they treat borrowers in difficulty.

The FCA has identified a number of issues with lending practices, including: not adequately tailoring support to individual circumstances; failing to respond appropriately to customers with characteristics of vulnerability; and not effectively engaging with customers about money guidance and debt advice.

Following these talks, the regulator secured up to £47m in redress from 17 of the lenders involved in the discussions who were deemed to have provided insufficient support to their borrowers.

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The FCA has also proposed extending temporary rules which were introduced during the pandemic which require lenders to support all borrowers in difficulty.

Under the temporary rules, lenders must provide support to customers who are struggling with repayments, ensure that repayment terms are appropriate, offer free money guidance to borrowers, and charge reasonable fees.

“Many firms have been following our temporary guidance, developed during the pandemic, to support borrowers in tough times,” said Sheldon Mills (pictured), executive director of consumers and competition.

“Our proposals today will help ensure this continues.

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“Where we see firms not providing the right support, we will act quickly to put this right. Firms are already paying up to £47m in compensation for not providing appropriate support to borrowers.

“If you’re worried about keeping up with payments, we encourage you to talk to your lender as soon as possible.”

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