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Mixed messages

Why creditor communications to people in financial difficulty need to offer a clearer, better route to help.

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StepChange Debt Charity worked with Amplified Global to assess the role that communications from creditors play in helping people resolve their financial difficulties. These communications should play an important role in alerting consumers to their financial difficulty and helping them to seek help.

However, our research, based on the experience of StepChange clients, found people in financial difficulty facing a range of barriers to getting help and support and creditor communications played a role in this.

Main findings

Communications could encourage people to get debt advice earlier

Communications from lenders could be improved to encourage more people to get help, including debt advice, earlier: People held off seeking debt advice because they were embarrassed about seeking help, worried about their credit rating, not aware of the seriousness of their financial situation or needed more explanation about how debt advice could help them and how they could access it. The ‘help message’ in creditor communications was not strong enough to overcome these barriers of many people.

Communications from lenders can act as a barrier to help

Communications can trigger strong negative emotions and misperceptions about debt recovery action that can be barriers to seeking help: Nearly 90% of survey respondents’ said communications triggered negative emotions including fear, helplessness and being overwhelmed. People experiencing these feelings were less likely to seek debt advice earlier.

Complicated language can act as a barrier to help

Legal and regulatory language can act as barriers to seeking help: The legal and regulatory language creditors are required to use in some communications can reinforce the negative feelings and sense of powerlessness that can lead people to disengage. People respond much better to simple language that recognises the difficulty of their situation and focuses on resolving problems and helping them to feel better.

Communications encouraged some engagements but not always getting help

Communications encouraged some engagement but engagement did not always lead to help. StepChange clients told us both helpful and unhelpful examples of customer support: People who felt helped were more likely to have sought debt advice earlier, compared to people who experienced unhelpful practice. There appeared to be a relationship between how helpful the key features of written creditor communications were perceived and how helpful a respondent found their creditors. More vulnerable clients who said they were not in a fit state to help themselves were more likely to report bad outcomes like borrowing more to deal with payment requests.

However, the research shows that communications can be effective: When written communications helped people understand the options available to them and reassured them that help was at hand, people were more likely to contact creditors and access advice earlier. These positive outcomes are important but were not widespread.

Implementation of the FCA’s Consumer Duty and HMT’s Consumer Credit Act review offer opportunities to rethink the aims and outcomes delivered by creditor communications to people in financial difficulty. The report urges firms to improve the language, tone and content of communications to encourage earlier engagement and help seeking, support effective referrals to debt advice, and support vulnerable customers through financial difficulties. In relation to this the report makes a number of recommendations including:

  •  The FCA should review the effectiveness of rules requiring firms to look for early signs of financial difficulty and ask firms to review their implementation of these rules.
  •  We ask the FCA and industry to address the role of the credit information system in creating barriers to people seeking help with financial difficulties earlier. The Credit Information Market Study providers an opportunity for this.
  •  Review the Consumer Credit Act requirements on creditor communications to ensure language required by rules and legislation does not create barriers to engagement and help.

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