On 12 July 2022, the Financial Conduct Authority (FCA) published a Dear Chair letter regarding action needed to ensure fair treatment of small and medium size enterprise (SME) customers when collecting and recovering debts, especially with the rising cost of living. The FCA has recently concluded multi-firm work with retail banks who provide SME lending services, which for some banks included Bounce Back Loans.  The FCA conducted interviews with senior staff, including the responsible Senior Manager(s) for collections and recoveries, and reviewed files of customers that were in collections and recoveries.

The FCA reports that it was disappointed to find repeated instances of poor customer outcomes and failures to treat customers fairly during its review of customer files. The FCA noted several themes that appeared to be driving poor customer outcomes:

  • Gaps in policies and procedures.
  • Staff training that did not adequately cover conduct requirements.
  • Manual interventions within systems which appeared to make delivering fair customer outcomes more difficult.
  • Absence of outcomes testing or quality assurance that considered whether customers had received fair outcomes from the end to end treatment they received.
  • Poor record keeping with some instances that complete customer files could not be provided and it was not possible for the FCA to determine if the customer had received a fair outcome based on the records.
  • Instances of customers providing information indicating characteristics of vulnerability that were not considered or suitably responded to.

Boards and senior management should consider the contents of the Dear Chair letter and take the necessary steps to make sure their firm meets the expectations below.