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ombudsman news

issue 147

February 2019

dealing with debt

This time of year can be bleak. With turkey and twinkling lights a distant memory, it’s back to reality. Many people will also be facing debt, exacerbated by the cost of Christmas, higher heating bills, and other expenses that peak in winter.

In 2018, Citizens Advice said people are struggling more with bills such as council tax and energy than with debt relating to financial services. This household debt sits outside the FCA’s remit – and ours as the ombudsman. But the two are linked, because in some cases they’re one of the reasons people take out loans, credit cards and other regulated debts. And these are things we can help with.

So what are we seeing, and how can we help? We’ve highlighted in this ombudsman news how businesses’ lack of empathy or flexibility can create additional problems for people who are struggling, and potentially in vulnerable circumstances. We’ll use our powers to ensure this doesn’t continue – and in some cases, tell businesses to pay compensation for the upset they’ve caused. The case studies we’ve chosen are aimed at helping businesses do things better.

But we’re also reassured by good practice we see. These positive signs are backed up in our own recent research: in complaints we reviewed in-depth, we saw a majority of debt collectors following codes of conduct, limiting the impact of unavoidably stressful situations.

The consequences of debt can escalate quickly – and where debt collection’s concerned, things may be a long way down the line before we’re asked to step in. So we’ll need to effectively prioritise cases where people urgently need our help. We’ll also need to quickly identify what’s beyond our remit, and make sure we’re signposting to other organisations who can provide support. This will often be free advice agencies or debt charities, which play a central role in helping people resolve their money worries once and for all. While the prospect of tackling your debt may be overwhelming, constructive conversations – followed up by effective action – are key to turning things round.

In this issue, we’ve asked people representing a range of perspectives – Citizens Advice, the Credit Services Association and Monzo Bank – for their thoughts on the challenges ahead. What’s clear is that debt is a complex problem, and no one organisation gets the whole picture. It’s essential we keep talking about what we’re each seeing – to help improve fairness for customers in our own regulated sector, financial services, as well as for those outside it.

debt collection – what people asked us to look into

top three issues in complaints resolved between 1 January and 31 December 2018:

  • 21% whether they were being asked for the right amount of money
  • 13% customer service issues, including administration errors, being contacted excessively or about debt they believed they’d repaid
  • 13% that the debt they were being chased for wasn’t theirs

Caroline Wayman

Image: Caroline Wayman
chief ombudsman
Caroline Wayman
chief ombudsman

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.