The Financial Conduct Authority (FCA) has issued a fresh warning to households seeking debt help, urging them to be alert to specific “red flags” that may indicate unsuitable or misleading debt solutions. The regulator said it is concerned that some people are being steered towards debt solutions that do not meet their needs.
What the FCA says about pressure tactics
The FCA emphasised that free, impartial debt advice is available to everyone, and no one should feel under pressure. Warning signs include feeling hassled or being repeatedly contacted, especially after an online inquiry or an unexpected phone call. People may also feel pressured to agree to a debt solution quickly over the phone or via WhatsApp, without having time to properly consider their options.
Another red flag highlighted by the FCA is being asked or encouraged to change details about income or outgoings on an application or assessment form, or being “coached” into what to put. Additionally, the person making contact may not explain who they work for, and in some cases, their details do not match the firm’s official details.
Charity leaders back the regulator’s advice
Alison Walters, director of consumer finance at the FCA, said: “Anyone struggling with debt deserves advice that puts their interests first. Free, impartial debt advice is available to everyone, and no one should be pressured or misled into paying for a debt solution that may not be right for them.”
Vikki Brownridge, chief executive of StepChange Debt Charity, echoed the warning. She said: “People struggling with debt can be understandably worried about where to turn for help, particularly when they’re faced with adverts or offers promising a quick fix. We also know that it can be difficult to open up to others if you’re struggling with debt, so it’s natural people may look online for sources of support in the first instance.”
Brownridge added: “This can draw up a whole host of solutions offering ways to clear your debt – not all of which are trustworthy. It’s important to remember that you should never have to pay for debt advice. There are free, independent, and non-judgmental organisations like StepChange that can help you understand your options and find a solution that’s right for your circumstances.”
What consumers should watch for
StepChange’s chief executive also advised consumers to be wary of anyone asking for upfront fees, making promises about writing off debt, or putting pressure on them to make a decision quickly. She said these are all red flags, and welcomed the FCA taking action against providers that may not have consumers’ best interests at heart.
The FCA’s warning comes as part of its ongoing efforts to protect consumers in the debt advice market. The regulator has said it will continue to monitor firms and take action where necessary. Households are encouraged to seek free, independent advice from regulated sources before agreeing to any debt solution.
