Regulators issue warning on debt collection practices

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The Financial Conduct Authority, Ofgem, Ofwat and Ofcom have jointly issued a warning to firms in financial services, energy, water and telecoms sectors.

In their statement, they expressed their determination to address the harmful impacts of debt collection practices.

In the letter, it is stated: “Firms should be prepared for regulators to use their respective powers to ensure these expectations are met and embedded in firms’ processes in their sectors.

“Where we find firms are falling short and delivering poor outcomes leading to consumer harm, we may take robust action.”

The letter highlighted the adverse effects of excessive debt communications on consumers facing financial difficulties.

It pointed out potential repercussions on mental and physical health, as well as decision-making processes.

Additionally, it identified the detrimental impact of intimidating or threatening language in debt communications, which could hinder consumer engagement with creditors and free debt advice services.

Expectations outlined in the statement demand firms to reassess the frequency and tone of collections communications, prioritising positive customer engagement.

In response, Conor D’Arcy, Interim Chief Executive of the Money and Mental Health Policy Institute, said: “People tell us that they often feel bombarded and harassed by the volume of messages they get from creditors about missed payments and that this causes real distress when they are already under huge strain.”

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