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Avoid FCA Breaches: UK FCA Debt Collection Rules and Agency Vetting

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FCA rules under CONC 7 and the Consumer Duty require debt collectors to treat customers in arrears with forbearance, pause active recovery when someone is seeking debt advice, and never use pressure tactics to force payment. Firms must assess whether a repayment plan is genuinely affordable, and repossession or legal action is meant to be a last resort, not a threat used to scare people into paying. The rest of this guide breaks down exactly what that means in practice, for both sides of the conversation.

TL;DR:

  • Debt collection firms must treat customers with forbearance by offering affordable, realistic repayment plans based on the customer’s actual financial circumstances.
  • When a customer requests debt advice, firms are required to suspend active recovery efforts for a reasonable period, typically around a month, and extendments need proper documentation.
  • Repossession or legal action is only permissible as a last resort after exploring all reasonable alternatives and following pre-action protocols, especially for secured debts.
  • Firms must monitor and manage communications carefully, avoiding harassment or undue pressure, and make reasonable adjustments for customers identified as vulnerable.
  • Debt purchasers and agencies are assessed for CONC 7 compliance, focusing on ethical practices and documented processes to ensure durable recoveries aligned with consumer protection rules.

Table of Contents

What FCA debt collection rules actually cover

The FCA Handbook’s CONC 7 provisions apply to any firm carrying out debt collecting, debt administration, or consumer credit activity that falls within regulated territory. That is a wider net than most people assume. It catches not just the agency chasing you for an unpaid loan, but firms buying debt portfolios, administering repayment plans on a lender’s behalf, and third-party collectors instructed by original creditors.

The legal basis sits in the Regulated Activities Order, article 39M, which defines debt collecting as a regulated activity requiring FCA authorisation. Any firm carrying out this activity without proper authorisation is operating illegally, full stop.

“Customer” is defined broadly under CONC 7, and this catches people out. It is not limited to the original borrower:

  • The individual who took out the original credit agreement
  • Guarantors who co-signed or underwrote the debt
  • People to whom the debt has been assigned or sold on
  • Joint account holders sharing liability for the balance

There is a grey area worth flagging: some debts, like certain utility arrears or council tax, sit outside formal consumer credit regulation. In practice, though, firms that collect these debts as part of a wider regulated collections business are often expected to apply the same forbearance standards anyway. Regulators tend to look at the substance of what a firm does, not just the technical label on the debt, when deciding whether CONC-style expectations should bite.

For consumers, the practical upshot is this: if a firm is chasing you for money, it is almost certainly bound by CONC 7, whether it originated the debt, bought it, or was simply instructed to collect it.

Forbearance and treating customers with due consideration

CONC 7.3 is the backbone of FCA debt collection compliance, and it sets a clear expectation: firms must treat customers in or approaching arrears with forbearance and due consideration. That is not a vague aspiration. The rule sets out specific, practical options firms are expected to consider.

  1. Deferring payments for a customer facing temporary financial pressure, such as a short gap in income.
  2. Accepting token payments where someone cannot meet the full contractual amount but can offer something toward the balance.
  3. Agreeing reduced payments that reflect what a customer can genuinely afford right now.
  4. Waiving interest or charges, either temporarily or permanently, where continuing to add them would make the debt unrecoverable or unfair.
  5. Extending the term of an agreement to lower monthly repayments to a sustainable level.

The word doing the heavy lifting in CONC 7.3 is “sustainable.” A repayment plan is not compliant simply because the customer agreed to it under pressure. The FCA Handbook expects firms to assess whether an arrangement is realistic given the customer’s actual circumstances, and to review it periodically rather than setting and forgetting it. A £50 monthly payment that leaves someone unable to buy food is not forbearance. It is a compliance breach waiting to be reported.

Third-party consumer guidance echoes this: firms should not threaten repossession or escalate action while a reasonable repayment arrangement is already in place and being honoured, according to debt advice explainers that summarise common CONC 7 scenarios.

Pro Tip: If a collector proposes a repayment amount that feels unaffordable, say so directly and ask for it to be reassessed. Firms have a regulatory duty to consider your actual income and expenditure, not just to hit a repayment target.

Suspending recovery when you seek debt advice

One of the most practically useful rules in CONC 7.3, and one of the least understood, is the suspension requirement. When a customer tells a firm they are seeking debt advice, the firm must suspend active recovery of the debt for a reasonable period to allow that advice to be obtained and considered.

In practice, the FCA and supervised firms typically treat this as about a month as a starting point, extendable by a further period where there is evidence the customer is making genuine progress toward getting advice. This is not a technicality. It is meant to stop firms racing to escalate action while someone is trying to get their finances in order.

What counts as acceptable evidence of progress tends to include:

  • Confirmation of an appointment booked with a debt adviser
  • A reference number or acknowledgement from a debt advice charity
  • Evidence that a Debt Respite Scheme (Breathing Space) moratorium application is underway
  • Correspondence showing the customer has engaged, even if advice has not yet concluded

Firms are also expected to log suspension periods properly: the start date, the end date, why an extension was granted, and what evidence supported it. This record keeping matters during FCA supervision, because a firm that cannot show it paused recovery, and why, looks non-compliant even if it technically did the right thing. It also interacts with the statutory Debt Respite moratorium, which gives people a fixed legal protection period separate from this discretionary suspension rule, so the two can run alongside each other.

Communications, contact frequency and vulnerability rules

Persistent, aggressive, or poorly timed contact from a debt collector is one of the most common sources of complaints, and it is squarely within FCA territory. CONC 7 does not set a rigid numerical cap on contact attempts, but it does prohibit communications that amount to harassment or undue pressure, and supervisory guidance has repeatedly reinforced this expectation.

The FCA has publicly warned firms, alongside other regulators, that debt collection communications must be supportive rather than aggressive, particularly where a customer shows signs of financial difficulty. Firms found repeatedly calling, texting, or writing to customers who have already engaged or requested reduced contact risk breaching CONC directly.

Vulnerability is where the rules get more specific, and more important. A vulnerable customer under FCA guidance is not limited to someone with a diagnosed condition. It includes:

  • People experiencing mental health difficulties, including anxiety or depression linked to their debt
  • Customers with physical or cognitive disabilities that affect their ability to manage correspondence or calls
  • Those going through major life events, such as bereavement, relationship breakdown, or job loss
  • People with low financial capability or limited English literacy who may not fully understand their rights
  • Older customers or those in poor health who may need a trusted third party involved

Firms are expected to make reasonable adjustments once vulnerability is identified or flagged: switching from phone calls to letters, slowing down the pace of a conversation, involving a nominated third party, or simply giving more time to respond. Vulnerable customer treatment is now one of the areas the FCA scrutinises most closely during firm visits, precisely because it is where poor practice causes the most harm.

Information disclosure matters too. Customers must be given clear details of the debt, who owns it, how it was calculated, and how to complain, in writing if requested. A collector who is vague about who they represent or how much is owed is already on shaky regulatory ground.

Enforcement limits, repossession and pre-action protocols

Repossession of goods or property is meant to be the last resort under FCA rules, not a routine collections tool. CONC 7.3 is explicit that firms must not threaten court action or repossession simply to pressure someone into paying faster, particularly where that threat has no realistic basis or where a reasonable arrangement is already in place.

For secured lending and possession claims specifically, firms must follow formal pre-action protocols before litigation. The Civil Justice Council’s Pre-Action Protocol requires lenders and collectors to explore alternatives, communicate clearly about arrears, and give borrowers a genuine opportunity to respond before court proceedings begin. In Scotland, additional protections under home owner and debtor protection legislation apply, adding further procedural safeguards before repossession action can proceed against a primary residence.

Key enforcement boundaries to know:

  • Court action or repossession threats used purely as leverage, with no genuine intention to follow through, breach CONC 7
  • Pre-action protocol steps must be completed and documented before a possession claim is filed
  • Firms must consider a customer’s response and any proposed arrangement before escalating
  • Repossession should only proceed where all reasonable alternatives have been exhausted

Statute-barred debt is another area firms sometimes get wrong, deliberately or otherwise. In England, Wales and Northern Ireland, most consumer debts become statute-barred after six years of no payment or acknowledgement, under the Limitation Act 1980; in Scotland, the relevant period under prescription law also runs to five years for most obligations. A debt does not disappear once statute-barred, but it generally becomes unenforceable through the courts. Firms can still ask for payment, but they must not claim or imply that legal action remains available when it does not. Doing so is a clear compliance breach and, depending on the wording used, potentially misleading under wider consumer protection law.

Continuous payment authorities and recovery costs

Continuous payment authorities, or CPAs, let a firm take repeated payments from a customer’s debit or credit card without asking permission each time. CONC 7 places specific limits on how they can be used in a collections context, because CPAs have historically been misused to drain accounts without proper warning.

Firms proposing a CPA must do so reasonably and proportionately, meaning the amount and timing should reflect what has actually been agreed, not an opportunistic attempt to recover more when funds happen to be available. Where a customer shows signs of financial difficulty, additional safeguards apply:

  • Firms must not use a CPA to take a payment amount larger than previously agreed without fresh consent
  • Customers have the right to cancel a CPA directly with their bank or card provider at any time, and firms must not obstruct or discourage this
  • Repeated failed attempts to take payment via CPA, run up card processing fees for the customer, are treated as a form of undue pressure

Recovery and enforcement costs are another frequent flashpoint. A collector can only add charges for things like letters, calls, or legal steps if the original credit agreement specifically permits it and the charges are reasonable and proportionate to the actual cost incurred. Under CONC 7.5, firms acting on behalf of a lender must also pass on payments and balance information promptly, normally within five working days of receiving them, so customers are not left in limbo over whether a payment has actually registered.

The Consumer Duty and debt purchasers’ wider responsibilities

The Consumer Duty changed the calculus for debt purchasing, collecting and administration firms significantly. Rather than judging compliance purely on individual customer interactions, the FCA now expects firms to demonstrate they are actively delivering good outcomes and avoiding foreseeable harm across their entire book of customers.

The DPCA portfolio letter sets out what this looks like in practice for firms in the debt purchasing, collecting and administration sector:

  • Firms must be able to evidence, not just assert, that customer outcomes are being monitored over time
  • Foreseeable harm, such as pushing an unsustainable repayment plan, must be identified and addressed proactively, not just reactively
  • Governance structures need clear ownership of Consumer Duty outcomes at senior management level
  • Remediation processes must exist for when monitoring reveals customers have been treated poorly

The most important shift is around influence. A firm’s responsibility under the Consumer Duty depends on its practical influence over customer outcomes, regardless of whether it holds a direct contractual relationship with that customer. A debt purchaser that never speaks to the customer directly, but sets the collection strategy its outsourced agency follows, cannot hide behind that distance. If it shapes the outcome, it owns responsibility for the outcome.

Pro Tip: If you’re a business instructing a third-party agency to collect on your behalf, ask them directly how they evidence Consumer Duty outcomes monitoring. A firm that cannot answer clearly is a governance risk to your business, not just theirs.

This matters for consumers too, even indirectly. It means a complaint about poor treatment can, in principle, reach up the chain to the firm that owns or set the strategy for the debt, not just the frontline collector who made the call.

What to do if a collector breaches the rules

If you believe a collector has crossed a line, whether through excessive contact, unaffordable repayment demands, or ignoring a request to suspend recovery, the process for challenging it is straightforward, even if it does not always feel that way in the moment.

  1. Gather your evidence first. Note dates and times of calls, save texts and letters, keep call reference numbers, and retain proof of any payments made.
  2. Put your complaint in writing to the firm. Every regulated firm must have a formal complaints procedure; ask for it and follow it, keeping copies of everything sent.
  3. Wait for the firm’s final response, which they are typically required to issue within eight weeks.
  4. Escalate to the Financial Ombudsman Service if you are not satisfied with the firm’s response, or if eight weeks pass without one.
  5. Report serious or repeated breaches to the FCA directly, particularly where you believe the conduct reflects a wider pattern rather than a one-off mistake.

Evidence quality genuinely determines outcomes here. A specific record (“called three times on 14 March despite being told I was seeking advice”) carries far more weight with an Ombudsman than a general complaint about feeling harassed.

Free, independent help is available at every stage, and using it early often prevents things escalating unnecessarily:

  • National Debtline provides step-by-step guidance on handling collector contact and building a complaint
  • MoneyHelper offers free budgeting and debt guidance backed by government funding
  • Citizens Advice can help draft complaint letters and explain your statutory rights

Seek legal advice specifically where a firm is threatening court action or repossession and you are unsure whether that threat is genuine or lawful.

Compliance checklist for firms collecting debts

Firms operating under FCA debt collection rules need more than good intentions; they need documented, repeatable processes that a supervisor could review without notice. The following checklist covers the core operational areas that come up most often in FCA reviews.

  1. Vulnerability screening at first contact and ongoing. Every customer interaction should include a live check for vulnerability indicators, not a one-off tick-box at account opening.
  2. Suspension logs for debt advice requests. Record start date, expected end date, evidence reviewed, and the reason for any extension beyond the initial period.
  3. Affordability assessments for every repayment arrangement. Sustainability, not just agreement, is the test; document the income and expenditure basis for each plan.
  4. Record-keeping across the full customer journey. Calls, letters, payment history, and complaints should be retrievable and time-stamped for at least the regulatory minimum retention period.
  5. Outcome monitoring at portfolio level, not just individual case level, to satisfy Consumer Duty expectations around foreseeable harm.
  6. Clear escalation triggers so that a customer showing repeated signs of distress or non-engagement is flagged for senior review, not simply passed to the next collection stage automatically.
  7. Assignment notice checks for debt purchasers. Customers must be formally notified when a debt is sold, with clear information about the new owner.
  8. Prompt payment forwarding, typically within five working days, where a firm collects on behalf of a lender rather than owning the debt outright.

Pro Tip: A useful internal test is to ask: could this file survive an FCA thematic review tomorrow, with no extra preparation? If the answer involves scrambling to pull records together, the gap is in day-to-day logging, not in policy documents. Firms building out these processes from scratch often find a structured FCA collections compliance guide helps translate the Handbook’s language into something an operations team can actually action.

How Debt Recovery Hub applies these rules when matching agencies

Regulatory compliance in debt collection is not a box you tick once. It is something you have to keep proving, case by case, and that is exactly why we built the vetting process behind Debt Recovery Hub the way we did.

When we match a business or individual with a collection agency, we look specifically at whether that agency’s practices align with CONC 7 principles: how they handle forbearance requests, whether they have documented suspension processes for customers seeking debt advice, and whether their communication style matches what the Consumer Duty now demands. An agency that cannot demonstrate this clearly does not stay in our network, regardless of how strong its recovery rates look on paper.

That matters because recovery rate and compliance are not always in tension the way people assume. An agency that pressures customers into unsustainable arrangements often sees those arrangements collapse within months, which helps nobody. Ethical debt collection practices built around CONC 7 tend to produce more durable outcomes over time, not fewer recoveries.

One honest caveat: if you are dealing with a debt personally and there is any vulnerability involved, financial, mental health, or otherwise, get free advice from National Debtline or MoneyHelper before engaging further with a collector or instructing recovery action. That advice costs nothing and often changes what happens next.

— Jack

Find a compliant collection partner without the guesswork

Working out whether a collection agency actually follows CONC 7 and Consumer Duty standards, on top of everything covered above, is not a quick job to do alone. Debt Recovery Hub does that vetting for you before you ever pick up the phone to an agency.

Debtrecoveryhub

Tell us the type of debt, the amount owed, how old it is, and where the debtor is based, and we match you with a vetted UK collection agency suited to that exact case, rather than a generic list you have to research yourself. It works the same way whether you are chasing a single unpaid invoice or managing recurring late payers across a business. If there is any indication the person who owes the money may be vulnerable, get free guidance from National Debtline or MoneyHelper first; a compliant agency will expect and welcome that step, not resist it. When you are ready to move forward, start a case through our debt collection matching service and get connected with an agency that already meets the standards this article has walked through.

This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.

Sources

FAQ

What are the FCA guidelines for debt collection?

The core guidance sits in CONC 7, requiring forbearance for customers in arrears, suspension of recovery while debt advice is sought, and a ban on pressure tactics like threatening court action without genuine intent to proceed.

What are the rules for debt collection in the UK?

UK debt collectors must be FCA authorised, follow CONC 7’s forbearance and communication standards, meet Consumer Duty obligations to deliver good outcomes, and use repossession or litigation only as a last resort after following pre-action protocols.

Can a 10-year-old debt still be collected in the UK?

Most unsecured consumer debts in England, Wales and Northern Ireland become statute-barred after six years without payment or acknowledgement, making them unenforceable through court, though a collector can still ask for payment; Scotland generally applies a five-year period under prescription law.

Can I ignore debt collectors in the UK?

Ignoring a debt collector rarely helps and can allow a firm to escalate toward court action unchallenged; it is better to respond, even briefly, and seek free guidance from National Debtline on your options.

How long can a debt collector suspend recovery for debt advice?

Firms typically suspend active recovery for around 30 days once a customer says they are seeking debt advice, with a further extension, often another 30 days, considered where there is evidence of genuine progress.

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