LONDON, Oct 19 (Reuters) - Britain’s Financial Conduct Authority has begun its second in-depth review of firms that help people repay their debts, saying it has refused to authorise some of them due to poor practice.
Debt management firms typically offer to draw up plans to consolidate debt repayments, with the borrower paying a firm who then passes on the money to the creditors.
The move coincides with a sharp rise in consumer credit, raising concerns among regulators as the Bank of England looks set to raise interest rates in the coming months, making the servicing of loans more expensive.
“Debt management remains a priority for us as poor practice by debt management firms poses a high risk to consumers, particularly those in vulnerable circumstances,” the FCA said in a statement on Thursday.
The watchdog had already told firms in the sector in 2014 that they needed to “raise their game” if they wanted to continue operating, after uncovering poor quality advice.
“Since then we have refused authorisation to a number of providers while others have left the market,” the FCA said.
“We will take appropriate supervisory action if we find that firms are falling short of the standards that we expect.”
The FCA said on Wednesday that over 4 million people in Britain are having difficulties paying their monthly bills. (Reporting by Huw Jones; Editing by Greg Mahlich)