More people are falling behind on credit card repayments as household budgets come under pressure from mounting bills. Lenders told the Bank of England they expect the number of unpaid credit card debts to continue rising throughout the autumn.
The squeeze on household finances is likely to drive up demand for debt advice services. However, people seeking help face risks from unscrupulous operators offering quick-fix solutions. The Financial Conduct Authority warns that unregulated firms use cold calls, social media and online adverts to collect personal details, sometimes posing as legitimate charities, before passing information to firms charging fees for debt solutions.
The FCA identified several warning signs of dodgy operators, including pressure tactics and repeated contact through phone and message services. Some firms encourage people to alter financial documents or coach them on how to respond to lenders. Others steer people towards fee-paying solutions like Individual Voluntary Arrangements without properly explaining alternative options.
Alison Walters, director of consumer finance at the FCA, said free impartial debt advice should be available to everyone. Vikki Brownridge, chief executive at debt charity StepChange, urged people to explore all options through free, impartial advice before making decisions. The government-backed Moneyhelper website helps people find authorised providers, with the FCA's register available to verify credentials.