Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential impact of late payment fees charged by (a) companies and (b) banks on people during the cost of living crisis.

Individual lenders, both banks and companies that offer credit products, make their own commercial decisions on late payment fees for their products. In doing so, they must comply with the rules and principles of the Financial Conduct Authority (FCA), as the regulator for consumer credit firms. This includes ensuring firms are ‘treating customers fairly’ and that any fees and charges levied on borrowers in financial difficulty are fair and do no more than cover their costs. The FCA can impose tough sanctions, such as banning products, imposing unlimited fines and ordering firms to pay money back to customers, where wrongdoing is found.

The FCA also issued ‘Tailored Support Guidance’ in January 2021 which was based on FCA rules and principles and provides guidance on the FCA’s expectations of firms when supporting borrowers in financial difficulty, including providing tailored forbearance. In June 2022, the FCA confirmed that this guidance remains relevant for borrowers in financial difficulties due to the rising cost of living.

More broadly, the government understands that people across the UK are worried about the cost of living, and are seeing their disposable incomes decrease as they spend more on the essentials. That is why the government has announced £37 billion of support for the cost of living this financial year. The government is continuing to keep cost of living pressures under review and focus support on the most vulnerable whilst also ensuring that any actions are fiscally responsible.