On 5 October 2018, the FCA published a Dear CEO letter to debt packager firms.

The service that these firms provide include: gathering customer information; providing debt counselling advice on the debt solutions available; recommending a debt solution for the customer; and, referring on to a third party provider. Upon this referral, the firm will be paid a referral fee by the third party provider which differs according to the solution recommended.

FCA concerns

The FCA understands that debt packager firms may be receiving higher fees for a specific debt solution such as an Individual Voluntary Arrangement (IVA) in comparison to other debt solutions. The FCA is concerned that the incentive to increase revenue streams could be a driver for a poor conduct culture in which firms may prioritise an IVA referral over a more appropriate solution. This may result in an inappropriate outcome for the customer.

The FCA also notes that customers who are struggling to repay their debts can be among the most vulnerable in society. Debt packager firms can play a key role in their customer journey. The FCA expects debt packager firms to have established policies and procedures that enable staff to appropriately identify and support vulnerable customers. This includes ensuring that timely referrals are made to free advice services, where appropriate.

Fair treatment of customers at the heart of the business

The Dear CEO letter is a reminder to CEOs of debt packager firms of the FCA’s expectations, in particular that the regulator expects such firms to ensure that their business model operates in a way that puts the fair treatment of customers at the heart of their business.

Whilst not exhaustive, the Dear CEO letter highlights a number of key rules alongside some associated guidance, contained in the FCA Handbook, that it expects firms to consider. In particular, the FCA expects debt packager firms to:

  • make a sufficiently full assessment of the customer’s circumstances to ensure that the advice provided is appropriate;
  • ensure that the firm’s staff have the necessary skills, knowledge and expertise to provide advice;
  • ensure that vulnerable customers are identified and receive appropriate support throughout their customer journey;
  • ensure that the financial promotions and customer communications used by the firm, its employees and its agents are clear, fair and not misleading and, where required by the FCA’s rules, contain prominent signposting to the Money Advice Service; and
  • maintain appropriate systems and controls, including in relation to the risks and requirements highlighted in the Dear CEO letter. Where relevant, the FCA states that this could extend to advice provided by any of the firm’s appointed representatives (ARs).


The FCA expects CEOs of debt packager firms to read the letter (and the Annex setting out its expectations in more detail) and consider what, if any, improvements need to be made in order to satisfy themselves that they are meeting the requirements. The FCA adds that if the reader of the letter is a Principal firm with an AR network then that reader is responsible for reviewing their compliance.

Debt packager firms are not required to respond to the Dear CEO letter but failure to comply with the FCA’s regulatory requirements could lead to enforcement action.

Thematic review of the debt management sector

The contents of the Dear CEO letter are separate from the FCA’s thematic review of the debt management sector. The FCA expects to complete this thematic review in Q1 2019.