The Financial Conduct Authority (FCA) has insisted that banks must treat small business customers fairly when collecting and recovering debts.
This came as part of the regulator’s work in response to the increased cost of living.
A review of 11 bank’s collection practices identified a number of issues, including:
- Lenders not treating small businesses fairly when they try to agree a sustainable payment plan – for example, arranging payment plans which are clearly unaffordable based on the information provided by the customer.
- Staff not having the right training to provide effective support to customers and make fair decisions about cases.
- Lenders not having clear policies to help staff identify and support vulnerable customers – meaning these customers may be missing out on the support they need.
- Not having quality assurance and testing for their processes to ensure that they deliver fair results for consumers – this can mean problems going undetected.
The FCA has provided feedback to the individual firms it reviewed. However, it wants to see the whole sector take action. It has written to the chairs of all retail banks with small business customers. The letter tells the boards of these banks to ensure that they are meeting the FCA’s expectations and to inform the regulator if they are unable to do so.
Sheldon Mills, the FCA’s executive director for consumers and competition, said: “People across the country will be affected by the rising cost of living – and this includes small businesses. We were disappointed to find repeated instances of these customers not being treated fairly by banks when they’re struggling.
“We expect the whole sector to act quickly to improve this. We will take action if problems continue.”