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StepChange response to FCA consultation on debt packagers

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StepChange has raised concerns for some years about the model of client acquisition in the debt solutions market that has referral fee-driven lead generators and debt packagers at its heart

We have seen bad practice by lead generators who use paid-for online ads that impersonate StepChange and other charities to lure consumers to their websites. Despite efforts to report ads to search engine and social media providers, we have continued to see similar examples of misleading ads, exposing more financially vulnerable consumers to harm through poor advice and inappropriate solutions. We estimate that around 15% of people searching for StepChange and other debt charities by name may have been diverted to a lead generator site by misleading paid search ads.

StepChange agrees that the FCA’s proposed ban on referral fees is the only effective remedy to address the harm caused by debt packagers. We remain concerned that the problem of harmful consumer advice journeys may continue through unregulated lead generation sites, particularly through the current ‘IP exemption’. We also remain concerned that ineffective regulatory control of online promotions for debt solutions creates a space for scams that put financially vulnerable consumers at risk of harm.

We would urge the FCA to continue to monitor the market and online promotions for evidence of avoidance. In particular, we would expect to see promotions from unregulated lead generators reduce significantly if the rules prove to be effective.

You can download our full response here.