Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, if his Department will takes step to ensure that consumers are not financially penalised after being erroneously designated by a company as a financial debtor.

The government has fundamentally reformed regulation of the consumer credit market. Responsibility for regulation was transferred from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA) in April 2014.

The FCA has binding rules for firms, actionable with the full range of enforcement powers. These rules strengthen consumer protection and provide greater clarity to firms on what is expected of them. Firms are required to comply with the FCA’s high-level principles, including ‘treating customers fairly’.

FCA rules require firms to take reasonable steps to ensure that they maintain accurate and adequate data (including in respect of debt and repayment history). This mitigates the risk that a consumer who is not the true borrower is pursued for repayment of the debt, or that the borrower is pursued for an incorrect amount.

Firms must also ensure that information they hold about customers is made available to those involved in debt recovery processes. This information includes, for example, whether a customer is in financial difficulties or is particularly vulnerable; if the customer has disputed the debt; or whether there is a repayment plan or forbearance in place.

If consumers are concerned about erroneous entries on their credit file, they should contact the Information Commissioner (ICO). The ICO is an independent UK supervisory authority that oversees and enforces compliance with both the Data Protection Act 1998 and Freedom of Information Act 2000.