Give struggling consumers a helping hand, UK tells high cost credit firms

LONDON (Reuters) - Britain's markets regulator told high-cost credit providers on Thursday to reduce risks for customers during the cost of living crisis with measures such as stepping up affordability checks and pointing the vulnerable towards debt advice charities.

In a "Dear CEO" letter to 700 providers of products including guarantor loans, doorstep lending and "rent-to-own" credit, the Financial Conduct Authority (FCA) said it supported a "sustainable and effective" high cost lending market.

However it said it would continue to seek to raise standards, focusing in part on how products are described and promoted, affordability assessments, complaint handling and support for those struggling with personal debt.

"It is particularly important, with the rising cost of living and increasing risk of financial hardship for consumers, and of consumers facing difficulties repaying debt, that firms

proactively take steps to manage and mitigate the risk of poor consumer outcomes and provide the appropriate assistance to customers," the FCA said in its open letter.

British consumers faced surging price rises even before an unfunded government package of energy subsidies and tax cuts last month sparked market turmoil, sending bond markets and the pound reeling and interest rates spiking further.

High-cost credit firms face new "consumer duty" rules from next July, under which they have to ensure they provide suitable products at fair value and meet diverse consumer needs, as surging inflation eats further into disposable incomes.

(Reporting by Kirstin Ridley; Editing by Susan Fenton)