Struggling UK borrowers are to be repaid £12m by lenders following intervention by the FCA.

The regulator has told 32 firms to make changes to improve the way they treat customers, with seven of these firms voluntarily agreeing to pay £12m in compensation to nearly 60,000 customers.  

A close review of a further 40 firms by the regulator will take place in the coming months, the FCA revealed, to make sure they are meeting its expectations and to protect customers from harm.  

The FCA said that it expects lenders to “learn the lessons” from good and poor practice during the coronavirus pandemic, to help borrowers during the cost of living squeeze. In the pandemic, the regulator acted quickly to put in place guidance that led to more than five million payment deferrals for mortgage and credit customers. This was followed by guidance on tailored support. 

In a report published today, the FCA found examples of firms delivering good outcomes for customers – but suggested that others must do more to support borrowers in financial difficulty. It found that just 30% of firms,15 out of 50, that it reviewed sufficiently explored customer’s specific circumstances, which meant repayment agreements were often unaffordable and unsustainable.

Executive director of consumers and competition at the FCA, Sheldon Mills, commented: “While many firms did well in supporting customers in difficulties during the pandemic, with our support and guidance, others sadly failed their customers.

“Given the current cost of living challenges, it’s vital that the sector continues to learn lessons to make sure they support struggling customers.

“We will take action to restrict or stop firms from lending to people if they fail to meet our requirements that consumers in financial difficulties should be treated fairly.”

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