Insights ¦ Consultation on ECB Standards for Vulnerability and Ability to Pay in Enforcement

Key Take Aways

1. The ECB’s Standards for Enforcement Work aim to embed a ‘vulnerability first’ culture to mitigate harm and improve fair treatment for vulnerable individuals.
2. Definitions of ‘vulnerability’ and ‘potential vulnerability’ are technical, grounded in the FCA model, encompassing health, life events, resilience, and capability.
3. The Standards advocate an outcome-focused, three-stage approach: Define, Identify, and Respond, promoting a culture of proactive assessment rather than relying solely on fixed characteristics.
4. Enforcement firms are responsible for developing comprehensive vulnerability strategies, including policies, oversight, and training to support enforcement staff.
5. A clear emphasis is placed on early, continuous identification of vulnerabilities and supporting disclosure opportunities during all enforcement process stages.
6. Standardised recording and sharing of vulnerability information within firms are fundamental to delivering nuanced, case-by-case responses.
7. Enforcement agents are expected to exercise judgement, adapt communication styles, and cease enforcement when acute vulnerability indicates it is unsafe.
8. The Standards extend to third-party interactions, requiring agents to be alert to vulnerability indicators and respond appropriately during enforcement visits.
9. The Ability to Pay Standards introduce a categorisation: in full, in part, or no ability to pay, designed to create consistency in assessments and targeted responses.
10. Recognising financial limits, the Standards emphasise sustainable and feasible repayment plans, discouraging pressure to recover debts in situations of incapacity.
11. Firms are expected to adopt a tailored, case-by-case approach, with flexibility built into processes for extending payment plans and facilitating debt advice.
12. Full implementation is planned over a six-month period post-launch, with firms demonstrating detailed readiness by March 2026 and full compliance by October 2026.

Key Statistics

• 24% of UK households projected to struggle financially by end of 2025.
• 13.1 million adults (24%) in the UK are characterised as having low financial resilience.
• 49% of adults (26.4 million) exhibit characteristics of vulnerability.
• 61% of debt advice clients in 2024 had additional vulnerabilities beyond their financial situation.
• 73% of those in council tax arrears with enforcement contact have experienced mental health problems.

Key Discussion Points

• The move to a ‘safe by design’ approach shifts enforcement culture towards recognising vulnerability as widespread and fluid.
• Definitions of vulnerability are being refined to include temporary and fluctuating states, aligning with FCA models.
• Early, continuous identification of vulnerability is crucial across all enforcement stages.
• Enforcement firms must develop centralised vulnerability strategies, including senior oversight and staff training.
• Collection and sharing of vulnerability and ability-to-pay data are necessary to avoid duplication and enhance case management.
• Moving away from a binary view, the Standards focus on assessing overall circumstances and tailoring responses accordingly.
• Enforcement agents are encouraged to exercise judgement, adapt communication, and cease enforcement if safety is compromised.
• The Standard promotes partnerships with third parties to identify and respond to vulnerability indicators during enforcement visits.
• The categorisation of ability to pay aims to improve consistency, with options for in full, in part, or no ability to pay.
• Emphasis is placed on sustainable, realistic payment plans that suit individuals’ actual financial circumstances.
• The Standards acknowledge the importance of broader debt advice engagement, including opportunities for extensions and referrals.
• Implementation will be phased, with strategic planning and staff training central to embedding these standards within enforcement operations.

Document Description

This article details the ECB’s consultation process on new Standards for Vulnerability and Ability to Pay in enforcement work, scheduled for finalisation by January 2026. It outlines the background, objectives, and key principles of these standards, emphasizing a cultural shift toward a ‘vulnerability first’ approach within enforcement agencies. Covering definitions, procedural frameworks, responsibilities, and compliance strategies, the article provides a comprehensive overview aimed at fostering fair, case-specific, and sustainable enforcement practices in the UK civil enforcement sector.