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Law360, London (August 5, 2020, 5:46 PM BST) -- The Financial Conduct Authority on Wednesday said it would hike the levy it charges to financial companies to fund debt advice by £14.2 million ($18.5 million) over the next year in response to demand for services during the coronavirus pandemic.
The City watchdog said it was notified by the Department for Work and Pensions that it must collect the funding from retail finance companies, in addition to an initial £63.2 million that was agreed to earlier this year. The extra money will help fund more debt advice under the Money & Pensions Service in England as demand from struggling customers grows in response to the COVID-19 crisis.
The Money & Pensions Service is sponsored by the government and brings together financial guidance bodies that help consumers.
HM Treasury also notified the regulator that it must collect an additional £2 million to support debt advice services in Scotland, Wales and Northern Ireland. This will supplement the £9.4 million that the government initially agreed on for the devolved authorities, the FCA said.
"The Treasury and DWP have informed us that these additional levies are essential to enable [money and pension services] and devolved authorities to respond effectively to the impact of the coronavirus crisis and the increase in the requirement for debt advice services across the U.K.," the watchdog said Wednesday.
DWP said that the additional money will help towards delivering on its commitment to assist 580,000 people in need of debt advice. It will also enable advisers to work remotely during the pandemic so they can continue delivering guidance to consumers.
Lenders and pension providers have until Sep. 30 to respond to the proposal.
The FCA has been working to protect consumers during the pandemic. The watchdog has introduced payment freezes and loan holidays on high-cost credit products, including payday loans and car finance. And it has put in place mortgage breaks for bank customers who have fallen ill or lost their job as a result of the crisis.
--Editing by Alyssa Miller.
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