Credit card payment defaults are rising as household finances tighten, according to the Bank of England, which expects unpaid debt to increase further this autumn. The surge is driving more people to seek debt help, but a thriving market of unregulated firms is preying on financial distress with tactics the Financial Conduct Authority warns consumers to avoid.
The FCA has identified a pattern where unregulated companies collect personal details through cold calls, online adverts, or by impersonating legitimate debt charities, then sell that information to fee-charging debt solution providers. Warning signs include pressure to make quick decisions, repeated contact via phone or messaging, and steering people toward paid options like Individual Voluntary Arrangements or debt management plans without explaining free alternatives.
Some firms encourage borrowers to alter financial details on lender paperwork or coach them on how to respond to creditors. The FCA says people should always verify who they are speaking with and cross-check that person's credentials against the Financial Conduct Authority's Firm Checker database.
Free, impartial debt advice is available to everyone. The government-backed Moneyhelper website lists authorised providers. Alison Walters, FCA director of consumer finance, stated: "Anyone struggling with debt deserves advice that puts their interests first. Free, impartial debt advice is available to everyone, and no one should be pressured or misled into paying for a debt solution that may not be right for them."
Those unhappy with an authorised firm's service can file a complaint with the independent Financial Ombudsman Service. Vikki Brownridge, chief executive of debt charity StepChange, said people should get full, free and impartial advice first and explore all options "in the safest and most sustainable way" before committing to any debt solution.
The BBC piece does not specify what recent regulatory enforcement actions the FCA has taken against unscrupulous debt firms, nor does it quantify how many people have been caught by these scams.