FCA: Banks must improve treatment of struggling small business borrowers
The Financial Conduct Authority (FCA) has told banks they must treat small business customers fairly when collecting and recovering debts.
A review of eleven 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.
The FCA review also found that staff did not have the right training to provide effective support to customers and make fair decisions about cases.
At the same time, lenders were found to not have clear policies to help staff identify and support vulnerable customers, meaning these customers may be missing out on the support they need.
The regulator also found that banks did not have quality assurance and testing for their processes to ensure that they deliver fair results for consumers - this can mean problems went 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.”