The FCA is currently assessing applications for authorisation from all debt management firms with interim permission. The FCA has previously warned that it considers the debt management sector to be high risk. In a thematic review, published in June 2015, it found evidence that firms were not meeting the standard expected. More than 100 firms have left the market since applications closed for debt management authorisation in February 2015.
The FCA is currently writing to 16,000 customers of debt management firm PDHL, which has been refused authorisation and can no longer carry on regulated debt management activities. In considering PDHL’s application for authorisation, the FCA found evidence that the firm offered poor quality debt advice and uncovered a number of failings, including in relation to:
- Consumers being advised to enter into debt solutions that were unsuitable for their circumstances.
- The adequacy of PDHL’s systems and controls regarding management information and effective quality assurance.
The FCA was concerned about the firm’s treatment of its customers. For example, one customer called PDHL to inform them that they had lost their job. PDHL did not review the case for two months at which point the firm identified that the customer had a negative disposable income. However, the customer’s request to reduce their minimum payment was not accepted and the customer agreed to maintain payments at the original level. This debt management plan failed as the customer stopped making payments to PDHL within three months.
Where the FCA decides to refuse an interim permission firm’s application for authorisation, the regulator is writing to customers of the firm once the interim permission lapses to inform them of that fact and advise them where they can get free, impartial debt advice. Consumers seeking debt advice should contact the Money Advice Service.