Debt warning issued as FCA reveals red flags consumers should watch for
People looking for help with debt are being urged to watch for pressure to make quick decisions, demands for upfront fees and requests to alter financial details, as the FCA warns some consumers may be pushed towards unsuitable paid-for solutions.
People seeking help with debt should watch for high-pressure sales tactics, requests to change financial details and demands for upfront fees, the Financial Conduct Authority (FCA) has warned.
The regulator fears some consumers are being steered towards fee-charging options that may not suit their circumstances. These can include individual voluntary arrangements (IVAs) or debt management plans.
Warning signs include repeated calls after an online inquiry or unexpected phone call, and pressure to agree to a solution quickly by phone or WhatsApp.
Consumers should also be wary if they are “coached” on what to put on forms, encouraged to change details about their income or outgoings, or not told about alternative options.
Another red flag is when a caller fails to explain who they work for, or provides details that do not match the firm’s official information.
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.”
Government-backed MoneyHelper provides information about free, impartial debt advice, while the FCA’s Firm Checker can confirm whether a business is authorised and whether its contact details match.
Vikki Brownridge, chief executive of StepChange Debt Charity, said: “Be wary of anyone asking for upfront fees, making promises about writing off debt, or putting pressure on you to make a decision quickly.”
People unhappy with an authorised firm can complain to it before taking their case to the Financial Ombudsman Service (FOS). The FCA also wants to hear from anyone who believes they received poor advice or were pressured into an unsuitable solution.