The UK’s top financial watchdog is giving banks in that country an ultimatum: treat customers struggling with Britain’s cost-of-living crisis fairly, or be barred from lending.
In a report issued Thursday (Nov. 3), the Financial Conduct Authority said it found that only 30% of the lenders it studied had “sufficiently explored customer’s specific circumstances, which meant repayment agreements were often unaffordable and unsustainable.”
The authority said in a news release that it has ordered 32 lenders to make changes to how they treat customers. Seven of these firms have agreed to pay 12 million pounds ($13.5 million) in compensation to close to 60,000 customers.
Read more: UK: Watchdog rules Free banking here to stay and big lenders to remain intact
“Given the current cost of living challenges, it’s vital that the sector continues to learn lessons to make sure they support struggling customers,” Sheldon Mills, the FCA’s executive director of consumers and competition, said in the release.
“We will take action to restrict or stop firms from lending to people if they fail to meet our requirements that consumers in financial difficulties should be treated fairly.”
Those financial difficulties are getting more and more severe. This week saw reports that food inflation in the UK had risen to a record annual rate of 11.6% for October, leaving people paying more for staples such as tea and sugar, as well as fresh foods.
