Lenders to pay out up to £47m in redress to borrowers in difficulty

The FCA has worked with almost 100 lenders on how they treat borrowers in financial difficulty and has sought significant improvements from many of them. Issues identified included not adequately tailoring support to individual circumstances, failing to respond appropriately to customers with characteristics of vulnerability, and not effectively engaging with customers about money guidance and debt advice.  

The FCA has so far secured up to £47m of redress from 17 of these firms for over 195,000 customers. It has given detailed feedback to all the firms it worked with on areas they need to improve. 

Separately, the FCA is proposing to make permanent requirements on lenders to support borrowers in difficulty, which were put in place during the pandemic.  

Under these rules and guidance, mortgage, consumer credit and overdraft providers have to:  

  • provide the right support to customers struggling to make repayments, which may include making reduced or no payments temporarily or changing the mortgage or loan term, taking account of individual circumstances 
  • ensure that repayment arrangements are appropriate  
  • signpost customers to free, impartial money guidance and debt advice   
  • not charge arrears fees that are higher than necessary to recover firms’ reasonable costs for consumer credit customers   
  • consider the overall impact of support arrangements on mortgage balances    

Sheldon Mills, Executive Director of Consumers and Competition, said:  

'Many firms have been following our temporary guidance, developed during the pandemic, to support borrowers in tough times. Our proposals today will help ensure this continues. 

'Where we see firms not providing the right support, we will act quickly to put this right. Firms are already paying up to £47m in compensation for not providing appropriate support to borrowers. 

'If you’re worried about keeping up with payments, we encourage you to talk to your lender as soon as possible.' 

Notes to editors

  1. Read CP23/13 (PDF)
  2. The consultation is open until 13 July 2023. The FCA expects new rules to come into force in H1 2024 and proposes to withdraw the Tailored Support Guidance at the same time. 
  3. The FCA has previously reminded firms of the standards they should meet to support struggling borrowers and where they need to improve their treatment of those in financial difficulty
  4. The FCA has also continued to look closely at how firms treat consumers in financial difficulty over recent months. While it has seen good examples of firms working to support customers, it has also continued to see poor practice from firms. 
  5. The FCA has information for consumers worried about keeping up with payments and for borrowers worried about mortgage costs. Worried borrowers can also visit MoneyHelper for useful money tips, budgeting tools and to find free, expert debt advice. 
  6. The FCA previously said it secured £29m in compensation from lenders to their customers. This is an update on this previous figure. 
  7. Find out more information about the FCA.