The Financial Conduct Authority has warned consumers to be alert to firms using pressure tactics or misleading information to steer people towards fee-charging debt solutions.
The regulator said free, impartial debt advice is available to everyone, but raised concerns that some consumers may be directed towards arrangements that are unsuitable for their circumstances.
It said warning signs can include repeated contact after an online enquiry, pressure to agree to a solution quickly by phone or WhatsApp, and attempts to encourage applicants to change details about their income or expenditure.
The FCA also highlighted cases where consumers may be coached on what to say during an assessment, or where fee-free alternatives are not properly explained before a paid-for option is recommended.
FIRMS URGED TO BE CHECKED
Consumers have also been advised to check the identity and authorisation status of any firm offering debt advice, particularly where the person making contact does not clearly explain who they work for or provides information that does not match the firm’s official details.
Alison Walters, director of consumer finance at the FCA, said: “Anyone struggling with debt deserves advice that puts their interests first. Free, impartial debt advice is available to everyone, and no one should be pressured or misled into paying for a debt solution that may not be right for them.”
The regulator is encouraging consumers to use MoneyHelper to locate free debt advice and to check the FCA Firm Checker before entering into any debt solution.
Anyone who believes they have received poor advice or been put under pressure to accept an unsuitable arrangement can contact the FCA. Complaints about authorised firms can also be referred to the Financial Ombudsman Service if they are not resolved by the business.
RECENT ENFORCEMENT ACTION
The warning follows recent regulatory action involving firms operating in the debt advice market.
The FCA has stopped Curtis Faraday from providing debt advice to new customers after raising what it described as serious concerns about its practices.
Those concerns included customers allegedly being led towards answers that made them appear eligible for a fee-charging Individual Voluntary Arrangement rather than being given impartial advice on the range of options potentially available.
The regulator has also banned Howard Duckett, a senior manager at Beauforce Corporation Limited, for a lack of honesty and integrity.
Consumers with a debt management plan arranged through Beauforce Corporation Limited have been urged by the FCA to stop making payments and seek alternative support.
