Debt management firm PDHL refused authorisation by FCA

The Financial Conduct Authority (FCA) is currently undergoing the process of contacting 16,000 customers of debt management firm PDHL, which has been refused authorisation and can no longer carry on regulated debt management activities.

Previous warnings have been made by the regulator over the high risk nature of the debt management sector, with firms being told that they need to make changes if they wish to become authorised.

However, a thematic review published in June 2015 found evidence that firms were not meeting the standards expected. Since applications for debt management authorisation closed in February 2015, more than 100 firms have left the market.

The FCA is currently assessing applications for authorisation from all debt management firms with interim permission. Firms that were previously regulated by the Office of Fair Trading have been operating with interim permission since responsibility for consumer credit transferred to the FCA on April 1st 2014.

Jonathan Davidson, director of supervision, retail and authorisations, 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.

Key failings found during the assessment of PDHL’s application were a poor quality of debt advice being given and the firm’s treatment of customers. In addition, consumers were being advised to enter into debt solutions that were unsuitable for their circumstances, while the firm’s systems and controls regarding management information and effective quality assurance were also found to be inadequate.

The FCA is now contacting all customers of PDHL to advise them of the firm failing to gain authorisation and providing details of where they can get free, impartial debt advice.