More than half of adults getting nuisance calls offering high-risk financial products

13 July 2016

More than half of adults in Britain (29.5 million people) receive unsolicited phone calls offering high-risk financial products and around one in eight are being called every single day, according to new research from StepChange Debt Charity.

The charity wants to see action from the Financial Conduct Authority (FCA) and Her Majesty’s Treasury (HMT) to ban unsolicited phone calls promoting high-risk financial products, which are harmful, widespread and can make people’s debt problems much worse.

The research also suggests that these calls, which offer products like high cost credit (e.g. payday loans) and fee-charging debt management services, have resulted in 1.5 million people taking out one of those two products.

StepChange Debt Charity’s research also suggests that the problem is particularly acute for financially vulnerable people who are already struggling with debt. A separate survey of the charity’s clients found that a third are receiving more than five calls a week and the charity estimates that up to 12,000 of the clients it advised in 2015 had taken out such services, adding an average of £1,052 in high cost credit to their existing debts.

Nuisance calls offering high-risk financial products are widespread

In a nationally representative poll of adults in Britain, StepChange Debt Charity asked 2,044 people if they had received a telephone call offering them high cost credit, such as a payday loan, or the services of a fee-charging debt management company in the last 12 months. The results show:

• 59% had received at least one call (29.5 million people)
• 8% received a call more than once a day (4 million people)
• 4% received one a day (2 million people)
• 16% said they received them more than once a week (8 million people)
• 6% received one every week (3 million people)

Financially vulnerable people also receiving these calls

StepChange Debt Charity also surveyed 1,177 of its own clients in a separate survey and found that:

32% received calls offering them high cost credit every week

• On average, they received 5.3 calls a week
• One in eight who had received a call had taken out high cost credit
• They took out an average of £1,052 in extra borrowing

Nuisance calls can cause harm financially

When people are already in financial difficulty, nuisance calls can cause them more hardship. High cost credit may seem to offer financial relief and a way to pay the bills in the short term, but once the substantial interest is added and repayments become due, it can add even more pressure. It can also make their debt problems more entrenched and more severe, particularly if it leads to a need for more credit just to get by.

Offering people who are in financial difficulty the services of fee-charging debt management company, where the costs can be substantial and that money is not going towards their debts, can make recovering from financial difficulty more difficult to afford and make it take a lot longer.

The FCA needs to ban these types of calls

StepChange Debt Charity believes its evidence shows nuisance calls are widespread and can be harmful, especially to people who are in financial difficulty. The FCA is currently carrying out a review of nuisance calls across consumer credit and StepChange Debt Charity is calling on the FCA to ban the unsolicited real-time promotion of high cost credit, i.e. offering it via unsolicited phone calls where someone can sign-up immediately.

The charity is also calling on HMT to give additional powers to the FCA so that it can ban lead-generators from carrying out the unsolicited promotion of fee-charging debt management services.

The unsolicited promotion of any kind of financial product is not a good way for it to be sold, particularly when that product is high cost credit or a fee-charging debt management service. These products are often targeted at people who are financially vulnerable and may feel they have little choice, but they can make someone’s situation much, much worse.

Making phone calls to offer these services takes away the vital steps in the decision-making process that everyone needs to go through before committing to financial products. Credit is something that needs to be bought, not sold, and people need time to decide whether they need it, whether they can afford it and to spend time looking around for the best deal.

Mike O’Connor, Chief Executive of StepChange Debt Charity, said:

“Unsolicited phone calls promoting high-risk financial products cause serious harm. Most people receive them and one in eight of us are bombarded with calls.
“The problem is particularly serious among the most financially vulnerable in our society. When someone is already in financial difficulty, they may be at their lowest ebb and feel they have no option but to make quick decisions through desperation, which can bring devastating consequences.

“Before taking out any financial product, people need to know whether it is right for them, work out if they can afford it and shop around for the best deal, but unsolicited phone calls can take these key decisions away from them. It is not a good way to sell credit or financial services and it is certainly not a good way to buy them.

“The FCA is currently reviewing nuisance calls, but in the wake of overwhelming evidence of their widespread nature and the damaging consequences, it needs to ban all unsolicited real-time promotion of high-risk financial products and HMT must give it the additional powers it needs to do so.

“A full and complete ban would not only protect those already in financial difficulty, it would also prevent further damage to the millions of people whose phones keep ringing and ringing.”

Notes to editors

1. Figures based on StepChange Debt Charity analysis of an online survey from YouGov PLC. Total sample size is 2,044 adults. Fieldwork was undertaken 8th-9th June 2016. The figures have been weighted and are representative of all GB adults (aged 18+). Estimates of the number of adults affected have been calculated by StepChange Debt Charity. These estimates are based on mid-2015 population estimates from the Office of National Statistics, released in June 2016, which indicate that there are 49,921,573 adults in Great Britain.
2. Figures based on StepChange Debt Charity survey with 1,177 respondents, carried out January to April 2016.
3. Previous research from StepChange Debt Charity has shown that 8.8 million people feel marketing calls (and texts) made them anxious or stressed, while 3.2 million said they were afraid to answer their phone.
4. StepChange Debt Charity estimates that 29.5 million adults have received a phone call offering high cost credit or fee-charging debt management services in the past 12 months. Figure based on survey results showing 59.19% say they have received a phone call offering these services in the past 12 months.
5. StepChange Debt Charity estimates that 1.5 million have taken out these services from an unsolicited phone call. Figure based on survey results showing that 1% of people said they took out high cost credit and 2% took out fee-charging debt management services.
6. A lead generator is a person that acquires the personal contact details of customers and passes the customers' details to a firm in return for a fee.