The FCA’s proposals aim to reduce the risk that consumers receive non-compliant debt advice that is biased towards debt solutions which may not meet their needs but generate referral fees for the debt advice firm. In this regard, the FCA are proposing new rules which ban debt packagers from receiving remuneration from debt solution providers. FCA consider that addressing the remuneration model which drives non-compliance is the most effective way of delivering the appropriate degree of protection for consumers. This would end the debt packager model. The ban will apply to firms providing regulated debt advice (‘debt counselling’) which do not also provide debt solutions. The ban would also apply to any of their appointed representatives. The proposals do not prevent firms from providing debt advice on a commercial basis and other business models may develop in this area.

The consultation can be found here.