A borrower who is struggling often asks a debt adviser, a family member or an attorney to deal with a lender. The Financial Conduct Authority (FCA) has rules on how lenders and their agents must treat those representatives, and on what happens when a borrower may lack the mental capacity to deal with a debt. They are found in sections 7.12 and 7.10 of the consumer credit sourcebook (CONC) and apply across the UK to firms carrying on consumer credit lending. This guide describes them as they stand in the FCA Handbook on 24 September 2026.
What lenders must not do under CONC 7.12
CONC 7.12.2R lists unfair business practices. A firm must not refuse to deal with a not-for-profit debt advice body, debt counsellor, debt adjuster or another person acting on behalf of a customer unless there is an objectively justifiable reason. It must not refuse to accept a payment tendered by the customer or on their behalf, unless the agreement requires payment to a third party, and it must not return or refuse to credit a repayment merely because it comes from a debt management firm. It must not refuse to deal with a customer who is developing a repayment plan, or a third party helping with a plan or a debt management plan, without an objectively justifiable reason.
Policies on freezing interest and negotiating
The same rule prohibits operating a policy of only negotiating the freezing of interest and charges where the lender already has an arrangement with the person acting for the customer, or a policy of refusing to negotiate with certain third parties or with a customer developing their own repayment plan. In practice, a borrower who writes to a lender on their own behalf, or through a free adviser, is entitled to have the request considered rather than being turned away because of who is asking. The guides to debt management plans and free debt advice explain the routes involved.
Contacting the customer directly
Where a person is acting on behalf of a customer, the lender must not contact the customer directly without their consent unless there is an objectively justifiable reason (CONC 7.12.2R(4)). The guidance in CONC 7.12.3G gives examples of when direct contact may be justified: after repeated unsuccessful attempts to reach the representative, or where the firm reasonably believes the representative is acting against the customer’s best interests. Direct contact is treated as justified where the firm is sending a statutory notice and taking the reasonable steps required by CONC 7.9.7R, or where the sole purpose is to signpost the customer to not-for-profit debt advice bodies. It may also be justified to refuse to deal with a representative that has failed to comply with consumer protection legislation or FCA rules.
Debt collectors acting for the lender
CONC 7.12.3G points out that the general duty in CONC 1.2.2R, requiring firms to ensure employees and agents comply with CONC, applies where a debt collector acts for a lender. The guidance also says that the FCA does not consider it justified to bypass a representative simply because that person has not agreed to follow the Insolvency Service’s Debt Management Protocol. Where the lender is in dispute with a representative, it should make its position known to both the representative and the customer as soon as practicable. How collectors may contact customers in general is covered in the guide to lender and debt collector contact rules.
When a customer may lack mental capacity
CONC 7.10.1R requires a firm to suspend the pursuit of recovery of a debt when it has been notified that the customer might not have the mental capacity to make relevant financial decisions about managing the debt or to engage in the recovery process at the time, or when it understands, or ought reasonably to be aware, that the customer lacks that capacity. The guidance in CONC 7.10.2G says the firm should allow the customer or their representative a reasonable period to provide evidence of the likely impact of any mental capacity limitation. CONC 7.10.3G adds that the rule does not stop a firm pursuing the debt through a responsible third party acting for the customer where the customer has given prior consent, for example under a registered lasting power of attorney.
Vulnerability policies
CONC 7.2.1R requires firms to have clear, effective and appropriate policies for customers in or approaching arrears and for the fair treatment of customers the firm understands or reasonably suspects to be vulnerable. The guidance says that customers with mental health difficulties or mental capacity limitations may fall into that category, that firms should have regard to the FCA’s vulnerable customer guidance (FG21/1), and that reviews of these policies should look at the full extent of support given rather than individual interactions in isolation. The wider picture is explained in the guide to the FCA’s vulnerable customer guidance.
FAQs
Can a lender refuse a payment sent by a debt management company?
Not merely because it comes from a debt management firm. CONC 7.12.2R prohibits returning or refusing to credit a repayment for that reason alone.
Does a lender have to stop chasing a debt if I lack capacity?
CONC 7.10.1R requires a firm to suspend recovery when it has been notified, or ought reasonably to be aware, that the customer may lack capacity to make relevant financial decisions about the debt or engage in recovery.
Can a lender still contact me if I have an adviser?
Direct contact needs consent or an objectively justifiable reason, such as sending a statutory notice or signposting to free debt advice.
The bottom line
FCA rules stop lenders turning away legitimate debt advisers, refusing payments merely because a debt management firm sent them, or bypassing a representative without good reason. Where mental capacity is in doubt, recovery must be suspended and the lender may continue only through a responsible third party the customer has authorised. Anyone struggling with a lender can ask a free adviser to act for them. This is general information, not financial or legal advice.