The regulator sent a letter to over 3,500 firms, including retail banks, consumer credit firms and unauthorised BNPL providers, reminding them of set standards and encouraging them to provide their customers with an appropriate level of care and assistance. 

In the letter, the FCA also advised lenders to bear in mind the financial pressures new borrowers may encounter and the impact on their expenditure. 

Considering and, where necessary, improving how they treat consumers in vulnerable circumstances, and productively directing customers who need money guidance or free debt advice was also mentioned in the communiqué.

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Sheldon Mills, executive director of consumers and competition at the FCA, said: “Many consumers are feeling the impact of the rising cost of living in their personal finances, and we expect this to increase over the next few months. 

“Early action is important for those struggling with debt. 

“We need all firms to get the basics right and provide good quality support. 

“Where we see more serious wrongdoing, we are already acting to ensure these firms improve.”

Sheldon added that the financial services industry plays an important part in helping consumers oversee their finances, and those in the field should expect the FCA to carefully look into how they do that over the upcoming months. 

The hike in household bills is expected to continue into the autumn, so it is important firms act now to ensure borrowers struggling with payments, and at-risk customers can find the help they need, the FCA believes. 

The watchdog’s expansive work has looked at how finance providers are treating borrowers in financial straits. 

While it has discovered examples of lenders providing the right support to their customers, most need to have better communication to really understand their customers’ individual circumstances.

This will allow them to provide the right tailored support and ensure arrangements to pay back debt are sustainable.

The FCA also has concerns that some customers in insecure situations are not getting the support they need, and certain lenders are not discussing the potential benefits of money guidance or free debt advice or helping and supporting borrowers to access these.

These worries were seen broadly across the sector, with more serious failings exposed at more than 30 firms, largely in the consumer credit sector. 

The regulatory body expects these lenders to enhance customer relations and is subsequently reminding them to offer struggling borrowers support that is customised to their specific circumstances, and only charge fair fees that cover their costs.

Those finding it hard to manage their finances should speak to their lenders for support as soon as possible, according to the FCA. 

Free support and advice are also available through services like the MoneyHelper.