One of Britain’s biggest debt management firms is paying compensation to customers after delays in handling thousands of cases meant people who were already struggling financially ended up owing more in interest and charges than they should have done.
Harrington Brooks is the first debt management company to agree a compensation package since the Financial Conduct Authority (FCA) took over responsibility for policing the sector on 1 April 2014.
The FCA said the Manchester-based firm was voluntarily paying £185,000 in redress to more than 4,500 customers after it emerged there had been delays in the issuing of letters to people’s creditors.
This meant customers may have been left with the impression that Harrington Brooks had been in contact with their creditors when it had not. “The delay resulted in some people owing more in interest and charges than if the firm had contacted creditors sooner,” the regulator said.
The announcement comes three months after the FCA said many debt management firms were “falling well short of our expectations” and would need to raise their game if they wanted to stay in business. The FCA has previously said these companies were advising consumers “who have often reached rock bottom”, so it was vital that they did their job properly.
In September 2014, Harrington Brooks advised the FCA that communications with some customers’ creditors had been delayed. “Customers’ creditors were not written to in a timely manner, meaning that interest and charges on their debts were frozen late,” the regulator said. Meanwhile, some customers suffered delays in hearing back from the firm, which meant they were not notified that interest and other costs had not been frozen.
Harrington Brooks cooperated with the FCA’s requests and will be writing to affected customers in the coming weeks to explain the situation and let them know about any compensation they are due.
The firm, which describes itself as “one of the UK’s leading debt solution providers” with more than 75,000 clients, said on its website: “We are pleased the FCA has acknowledged our role in bringing to light some discrepancies and minor delays in our communications to creditors at the inception of a relatively small number of debt management plans.”
It added: “While any error or shortcoming in service is regretted and we apologise to any customers affected, this particular issue was an intermittent short delay in the production of a creditor communication, and it was in most cases mitigated by other communications to creditors.”
In November the Guardian reported that another debt management firm, Bournes Debt Solutions, had collapsed into administration with at least £500,000 of customers’ money apparently missing.
