On 18 March 2024, the Financial Conduct Authority (FCA) published a joint letter with Ofgem, Ofwat and Ofcom via the UK Regulators’ Network, outlining their shared expectations of the consumer outcomes firms should be delivering in response to identified consumer harms across their sectors, particularly in relation to debt collection practices.

Accordingly, together with Ofgem, Ofwat and Ofcom, the FCA has urged firms to:

• Make sure customers in debt do not receive excessive communication, as this can cause consumer harm in various ways such as affecting customers’ mental and/or physical health, leading them to make decisions that are not in their best interests, or to not engage with the collections process. The regulators note that firms should ensure an appropriate frequency of debt collections communications and reduce the frequency where it is not delivering positive customer engagement or is causing harm to consumers.
• Use language that is supportive in tone and that facilitates positive engagement with the customer. The regulators warn that using intimidating or threatening tone in debt collections communications can lead to consumers disengaging with their creditors, reducing chances of repayment and the likelihood of seeking free debt advice, and can also have a negative impact on customers’ mental and/or physical health.
• Ensure that information about free debt advice and how to access it is clear and prominent in debt collections communications and ‘warm’ referrals (where a firm refers the customer to another organisation directly so that the customer does not have to make a second call) are used where appropriate.
• Make it as easy as possible for advisers from free debt advice organisations to contact creditors and resolve issues on behalf of customers.

The Annex to the letter outlines the rules, guidance and best practice relevant to delivering the outcomes discussed across the relevant sectors. With regard to financial services, the letter highlights the importance of the Consumer Duty for firms in assessing whether their collections processes (including the tone and frequency of debt communications) are delivering fair outcomes for their customers. The guidance also refers to the FCA’s guidance on fair treatment of vulnerable customers (FG21/1) and the obligations for firms set out in the Consumer Credit Sourcebook (CONC) 7.9, and flags some of the FCA’s previous enforcement actions against firms who have failed to meet standards.

Next steps

The FCA aims to publish its Policy Statement in H1 2024 in response to its consultation (CP23/13) setting out plans to incorporate aspects of the Tailored Support Guidance into CONC and the Mortgages and Home Finance: Conduct of Business (MCOB) sourcebook and withdraw the TSG.