Financial Ombudsman Service  

Fos warns of lack of empathy for vulnerable clients

Fos warns of lack of empathy for vulnerable clients

The Financial Ombudsman Service has warned financial services firms must improve their treatment of vulnerable customers, after experiencing a "lack of empathy" from debt collectors.

In its newsletter published today (February 5), the body said it had come across aggressive customer service tactics, disputes about the debt size, breaches of confidentiality and a failure to carry out instructions.

Caroline Wayman, chief ombudsman and chief executive of the Financial Ombudsman Service, said: "In the past three years we have investigated thousands of complaints from consumers about debt collection companies.

"We have seen cases where a lack of empathy or flexibility from businesses can create more problems for people who are struggling, and who may be in vulnerable circumstances."

The Fos received 3,300 enquiries about debt collection and had taken on 1,000 new complaints for investigation in 2018.

Of the complaints resolved by the ombudsman service last year, one in five were about whether the consumer was being asked for the right amount of money and 13 per cent addressed customer service issues, including being contacted excessively by debt collection companies.  

Another 13 per cent involved a consumer claiming the debt being chased did not belong to them.

But Ms Wayman said the ombudsman had also identified examples of good practice in debt collection companies.

These included most businesses offering flexibility on the amount of money they were prepared to accept, with the debt generally being written off if it became clear the consumer would never be in a position to repay the amount.

The ombudsman found the majority of businesses had references to debt charities in their correspondence with consumers, although it noted this was sometimes in small print at the bottom of the letter.  

Adam Burgess, senior creditor liaison policy officer at Citizens Advice, said: "Money advisers are aware that how debts are collected plays a huge part in how people manage to cope with them.

"The way organisations chase debt can push people further into debt and turn small amounts of arrears into large, unmanageable debts."

Mr Burgess said: “Over the past decade the sector has made significant improvements in assessing affordability, identifying people in vulnerable circumstances, working with the advice sector and communicating with their customers.

"There is no doubt that improved regulation from the FCA has played an important part in this. Yet, the industry should be given credit where it is due."

In contrast, Mr Burgess said, the debt collection practices of local and central government and some essential service providers had "fallen behind considerably".

Mr Burgess said of the issues Citizens Advice helped consumers with last year, household debt issues were almost twice as likely to be related to the way debts were collected than consumer credit debt issues.

He said: "As an example, the reliance of local government on bailiffs is a common problem which has knock-on effects.

"Using bailiffs can quickly increase a debt and make agreeing a sustainable payment plan more difficult.