FCA proposes ban on debt packager referral fees to protect consumers

The FCA is proposing to ban debt packager firms from being paid to refer customers on to other firms.

Debt packagers are regulated providers of debt advice, who refer customers on to other providers of debt solutions. They rely on income from referral fees paid by these other firms. The referral fees paid for some types of debt solution (such as IVAs) can be higher than for other solutions. As result, debt packagers have a conflict of interest between giving advice in the customer’s best interest, and making a recommendation that makes them more money. The FCA’s proposals would protect consumers by banning debt packagers from accepting referral fees.

The consultation closes on 22nd December 2021.

Source: FCA