People seeking debt help urged to watch out for these ‘red flags’

People seeking help with debts are being urged to watch out for “red flags” that could potentially make their issues worse.

The Financial Conduct Authority (FCA) said it is concerned that some people are being steered towards fee-paying debt solutions that may not be suitable for their needs, sometimes through high pressure sales tactics, misleading information or being advised by firms who do not have the appropriate permissions.

It said free, impartial debt advice is available to everyone – and no one should feel under pressure.

The FCA said warning signs to watch out for include feeling hassled, or repeatedly contacted, particularly after an online inquiry or unexpected phone call.

People may feel pressured to agree to a debt solution quickly over the phone or via WhatsApp, without time to properly consider their options.

Another red flag is being asked or encouraged to change details about income or outgoings on an application or assessment form, or being “coached” into what to put.

People may be pushed towards a fee-charging debt solution, such as individual voluntary arrangements (IVAs) or debt management plan, without alternative debt solutions being properly explained or offered first.

Another warning sign is the person making contact not explaining who they work for. In some cases, their details do not match with the firm’s official details.

Alison Walters, director of consumer finance at the FCA, said: “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.”

People can find information on how to get free, impartial debt advice on the Government-backed MoneyHelper website.

They can also use the FCA’s Firm Checker service to confirm a firm is authorised and that its contact details match.

The FCA said people who are unhappy with an authorised firm can complain to it and if they are still unhappy they can take their complaint to the Financial Ombudsman Service (FOS).

It said people should contact the FCA if they feel they have received poor debt advice, or been pressured into an unsuitable debt solution.

Vikki Brownridge, chief executive of StepChange Debt Charity, said: “People struggling with debt can be understandably worried about where to turn for help, particularly when they’re faced with adverts or offers promising a quick fix.

“We also know that it can be difficult to open up to others if you’re struggling with debt, so it’s natural people may look online for sources of support in the first instance.

“This can draw up a whole host of solutions offering ways to clear your debt – not all of which are trustworthy.

“It’s important to remember that you should never have to pay for debt advice.

“There are free, independent, and non-judgmental organisations like StepChange that can help you understand your options and find a solution that’s right for your circumstances.

“Be wary of anyone asking for upfront fees, making promises about writing off debt, or putting pressure on you to make a decision quickly.

“These are all red flags to watch out for, and we welcome the FCA taking action against providers that may not have consumers’ best interests at heart.”