People seeking debt advice are being urged to watch out for red flags.
Free debt advice is available to everyone. However, the FCA is concerned that some consumers are being steered towards fee-paying debt solutions that may not be suitable for their needs, sometimes through high pressure sales tactics, misleading information or being advised by firms that do not have the appropriate permissions.
Red flags include:
- Pressure tactics: Feeling hassled, or repeatedly contacted, particularly after an online enquiry or unexpected phone call, and being pressured to agree to a debt solution quickly over the phone or via WhatsApp, without time to properly consider their options.
- Changing details: Being asked or encouraged to change details about income or outgoings on an application or assessment form, or being 'coached' to say certain things.
- Failing to disclose, or discouraging, fee-free alternatives: Being steered towards a fee-charging debt solution, such as Individual Voluntary Arrangements (IVAs) or some debt management plans, without alternative debt solutions being properly explained or offered first.
- Unclear identity: The person contacting the consumer does not explain who they work for, or their details do not match with 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.'
Advice for consumers
- You can find information on how to get free, impartial debt advice on the MoneyHelper website[1].
- Before considering a debt solution, use the FCA Firm Checker[2] to confirm a firm is authorised and that its contact details match.
- If you think you’ve received poor debt advice, or been pressured into an unsuitable debt solution, please contact us[3].
- If you’re unhappy with the way you are treated by an authorised firm, you can complain. If you're dissatisfied with the firm’s response, you should refer your complaint to the Financial Ombudsman Service[4].
Read more about unauthorised or unsuitable debt advice[5].
The FCA recently took action against debt advice firm Curtis Faraday (PDF)[6], after identifying serious concerns, which included leading customers to give answers that made them appear to qualify for a fee-charging IVA, rather than being offered impartial advice and a debt solution that may have better suited their circumstances. The FCA has stopped the firm from providing debt advice to new customers.
The FCA has also recently banned Mr Howard Duckett, senior manager at debt advice firm Beauforce Corporation Limited[7], for a lack of honesty and integrity. The FCA is urging consumers who currently have a debt management plan arranged with Beauforce Corporation Limited to stop payments and seek alternative support.