StepChange Debt Charity calls for greater protection for financially vulnerable
25 March, 2013
In response to the release today of the Financial Conduct Authority (FCA) business plan and risk outlook, StepChange Debt Charity is calling on the government to ensure that over the next year there is a comprehensive strategy to protect financially vulnerable consumers from failures within consumer credit markets.
The charity believes that prior to the FCA taking control of consumer credit in April 2014 the government must ensure that the Office of Fair Trading (OFT) is adequately resourced to continue its essential work protecting consumers.
The charity has highlighted a number of key areas where financially vulnerable consumers face potential detriment:
StepChange Debt Charity is seeing rising numbers of people falling into financial difficulty. Often through “predatory practices”, such as lending to those already in financial hardship or payday loans. This can exacerbate financial problems through excessive charges or rollovers and lead people into an unsustainable cycle of dependency on credit.
Aggressive collection practices
The charity regularly assists clients who have been subjected to unfair and aggressive collection practices including excessive charges, threatening behaviour such as harassment and intimidation, refusal to consider reasonable payment offers and the misrepresentation of legal powers. Aggressive collection practices can cause undue stress and anxiety for already vulnerable consumers.
Protecting consumers’ money
The collapse of fee charging debt management companies and subsequent transfer of clients to other fee charging firms, highlights the lack of protection for consumers in this market where many are being exposed to potential financial loss. The Financial Services Authority (FSA) says that there needs to be provision for the protection of consumers’ money under the new regime, yet in the meantime consumers will continue to be put at risk.
StepChange Debt Charity’s external affairs director Delroy Corinaldi said: “Low wage growth and rising household costs are driving many people into financial hardship, and there is little sign of these problems abating. Those who are already financially vulnerable need to be protected from poor industry practices that potentially leave them worse off.
“With another year before the FCA takes control of consumer credit, StepChange Debt Charity believes that the protection of financially vulnerable consumers must be made a priority for the coming year.
“The OFT has recently taken positive steps to address the serious problems that exist within the payday sector. The government must ensure this initial work is not in vain and that the OFT continues to be funded and resourced properly in the coming year”.