Regulators have issued a joint warning to companies to improve their debt collection practices as greater more consumers find themselves owing money amid the cost of living crisis.
The Financial Conduct Authority, Ofgem (energy), Ofwat (water) and Ofcom (communications) have warned they will take “robust action” if firms fail to meet expectations.
Regulators had identifying failings including debt collectors using intimidation and threats in messages; customers in debt being inundated with messages; and companies making it hard for debt advisers to contact them on behalf of clients.
“Customers subject to collections activity are highly likely to be in vulnerable circumstances due to financial difficulty – and may also have other, non-financial characteristics of vulnerability such as problems with their physical or mental health,” the regulators said.
“Firms should be aware that customers in vulnerable circumstances may find it difficult to engage with creditors, and that their vulnerabilities may be exacerbated if creditors take an inappropriate approach to collections.”
The letter warns “firms should be prepared for regulators to use their respective powers to ensure these expectations are met.
“Where we find firms are falling short and delivering poor outcomes leading to consumer harm, we may take robust action.”
The situation would be kept “under review whether further action is required to ensure firms use debt collection strategies that provide the right support, and minimise harm to their customers”.
Last year, the FCA issued a warning to debt collection agencies and debt advice services after finding evidence of firms writing misleading letters to people suggesting or stating they may face court proceedings when the firm knew or ought reasonably to know that that possibility had expired.
Energy firms have also faced criticism for their methods of seeking debt repaymentsm including forced instalment of prepayment meters.
Charity Debt Justice has warned that a record 6.7 million people in the UK are in financial difficulty.
A survey for found that 13 per cent of adults had missed three or more credit or bill payments in the last six months, rising to 29 per cent among 18- to 24-year-olds and a quarter of 25- to 34-year-olds.
The Insolvency Service’s latest data shows 10,136 people entered insolvency in February, up 23 per cent on the same period last year.