LONDON - Britain's Financial Conduct Authority said on Thursday it will stop banks from lending if they fail to treat customers caught in the cost of living crisis fairly.
Many consumers are struggling to pay bills as inflation hits 40-year highs over 10%, energy costs rise following Russia's invasion of Ukraine, and interest rates move higher, with more increases expected from the Bank of England on Thursday.
The FCA published a report on Thursday into how banks responded during the COVID-19 pandemic and what lessons could be applied in the current cost of living crisis.
"We want firms to consider the contents of this report and take immediate action where necessary to ensure that (they) are well placed to support customers now, and as the situation becomes more challenging in the months ahead," the report said.
The watchdog said it has already told 32 firms to make changes to improve the way they treat customers and so far, seven of these have voluntarily agreed to pay 12 million pounds ($13.51 million) in compensation to nearly 60,000 customers.
"We will take action to restrict or stop firms from lending to people if they fail to meet our requirements that consumers in financial difficulties should be treated fairly," said Sheldon Mills, the FCA's executive director for consumers and competition.
The watchdog said it will be closely reviewing a further 40 firms in the coming months to make sure they are meeting its expectations and to protect customers from harm.
($1 = 0.8885 pounds)
(Reporting by Huw Jones; Editing by Jason Neely and Jan Harvey)