Your Right to Reject a Forced Repayment Plan: FCA Regulations Explained

 

Understanding Persistent Debt & Your Legal Protections

If you’ve had a credit balance for over 36 months, your lender may classify your account as persistent debt under Financial Conduct Authority (FCA) guidelines. They might pressure you to increase payments or place you on a repayment plan—but did you know that repayment plans are voluntary if you’re meeting your contractual obligations?

Many borrowers don’t realize they have the legal right to refuse a repayment plan as long as they are paying the required amount. Let’s break down your rights, the regulations protecting you, and how to push back against forced repayment schemes.

What is Persistent Debt?

According to FCA rules, a borrower is in persistent debt if, over 18-36 months:
✔ They pay more in interest and fees than they pay toward the actual balance.
✔ Their repayments do not significantly reduce the debt.

After 36 months, lenders must take “appropriate steps” to help the borrower pay off the balance in a reasonable timeframe. However, this does not mean they can force a repayment plan—it simply means they must give options to reduce costs.

The Misconception: “FCA Requires a Repayment Plan”

Some lenders incorrectly claim that placing borrowers in a repayment plan is mandatory under FCA rules. This is not true. The FCA guidelines only encourage lenders to offer repayment solutions, but they cannot force you into a plan if you’re meeting your obligations.

Your Legal Right to Reject a Repayment Plan

Under FCA Consumer Credit Sourcebook (CONC) 6.7.3G, lenders:
✅ Cannot force a borrower into repayment restructuring if they are meeting their contractual obligations.
✅ Must recognize that repayment plans are voluntary, allowing customers to opt-out.
✅ Must ensure fairness under FCA Consumer Duty (2023 regulations), meaning repayment adjustments cannot create financial hardship.

Additional Legal Protections:

• CONC 7.3.2R – Creditors must ensure repayment strategies do not create difficulties for borrowers.
• UK Consumer Rights Act 2015 – Prevents lenders from imposing unfair financial policies or modifying terms without justification.
• FCA Policy Statement PS24/2 (Effective November 2024) – Strengthens borrower protections by requiring lenders to provide flexible repayment options rather than forcing rigid plans.

If you are paying more than the minimum required and actively reducing your balance, your lender cannot legally force you into a repayment plan.

 

How to Push Back Against a Forced Repayment Plan

If your lender tries to force a repayment plan despite you meeting contractual obligations, here’s how to respond:

1️⃣ Request Written Justification

Ask them to explain why they are attempting to enforce a repayment plan when you are paying above the minimum contractual amount.

2️⃣ Assert Your Right to Reject

Inform them that persistent debt repayment plans are voluntary and reference FCA CONC 6.7.3G, which protects borrowers from forced restructuring.

🗣 Example Response:
“Under FCA regulations, repayment plans are voluntary. As I am meeting my contractual obligations, I formally reject enrollment in a repayment plan. Please confirm my opt-out in writing.”

3️⃣ Demand Written Confirmation

Request formal confirmation that:
✔ Your rejection of the repayment plan is accepted.
✔ Declining the plan will not impact your credit score or account standing.
✔ No further pressure will be applied regarding repayment restructuring.

4️⃣ Escalate to the Financial Ombudsman If Needed

If your lender refuses to acknowledge your rights, you can file a formal complaint with the Financial Ombudsman Service. Their role is to protect consumers from unfair financial practices and ensure lenders follow FCA guidelines correctly.

 

Final Takeaway: Your Finances, Your Choice

Don’t let lenders convince you that repayment plans are mandatory when they are strictly voluntary under UK law. If you are paying more than the minimum, your lender cannot force you into a repayment scheme.

Know your rights, push back when necessary, and ensure your financial future remains under your control—not your lender’s.