TR15/8: Quality of debt management advice – Financial Conduct Authority

[Legal Beagles]

This paper reports on the findings of our thematic review of the quality of debt management advice. Source: TR15/8: Quality of debt management advice – Financial Conduct Authority
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[Amethyst]

Re: TR15/8: Quality of debt management advice – Financial Conduct Authority

The FCA found that firms were falling short of the standards they expect;

• The quality of advice provided by the fee-charging debt management firms was of an unacceptable low standard. Firms were not assessing customers financial circumstances reasonable and this could result in a solution being recommended that was not suitable
• The various debt solutions available to customers were not adequately explored in the advice process. This was particularly the case where a potential solution would result in little or no remuneration for the firm and for customers in scotland who were recommended debt management plans
• Advice provided in the free to customer debt management firms was generally of a higher standard. These firms exhibited fewer of the more significant failings seen in the fee-charging firms but there was still scope for material improvement
• Information about the availability of free advice was either not provided, was not sufficiently prominent or was biased against or derogatory about the free sector
• Debt Management firms were not adequately considering the suitability or appropriateness of additional products that they wee offering the customer
• Some firms lack the fundamental regulatory infrastructure needed to manage the risk of providing unsuitable advice. this included deficiencies in compliance resources management information and quality assurance arrangements.