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11 March 2016

FCA Contacting 16,000 Customers of Debt Management Company, PDHL

The FCA has confirmed today that it is currently  in the process of contacting 16000 customers of Cheshire based debt management firm, PDHL having refused the firm's application for authorisation.  

This news comes as a reminder that the debt management sector is high risk and as such, firms need to demonstrate that they are meeting the standards expected. 

Jonathan Davidson, director of supervision - retail and authorisation at the FCA said:

"Poor debt advice can lead to consumers trying to make payments on their debt that they cannot afford which is particularly serious for those in vulnerable circumstances and why we have paid very close attention to the advice given to consumers by debt management firms.

As part of our authorisation process, all firms must demonstrate that they have customers’ interests at the heart of their business.”

Whilst reviewing PDHL's application for authorisation, the FCA discovered that the firm had offered poor quality debt advice and also uncovered a number of other failings:

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

For example, when a customer contacted PDHL to request a reduction in their minimum payment after they had lost their job, the case was not reviewed for 2 months by which time the customer had a negative disposable income.   Another customer in a similar situation agreed to keep paying the minimum payment of £30 by borrowing money from their mother. 

When the FCA refuses an authorisation application from a firm with interim permission, the regulator writes to customers of the firm once interim permission lapses to let them know that they should contact the Money Advice Service for free impartial debt advice.

Visit the FCA's website to read the full article...

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