From the desk of Kevin Still
I managed to speak to Brian Corr, FCA director of Retail Lending, at the CCTA event this week. I have flagged a number of topical items in our sector, including the delays in the HM Treasury consultation on Statutory Debt Repayment Plans (SDRPs) and the CONC 8 review. We also discussed when the Debt Packager policy statement will be issued. We discussed some of the other items covered in the main event and panel sessions, including vulnerability, affordability, Consumer Duty and the Principal/AR regime. He made himself available at the dinner on 26th and through a lot of the day on 27th. I managed to spend some time with Chris Fitch before he had to sprint off for his train after his panel session. It sounds like there is some good material due out in the near future.
According to Citizens Advice, record numbers of prepay gas and electricity customers in the UK stopped topping up their meters after the energy prices rose. By the end of April 2022, the charity will have seen more than 1,300 cases of people going without pay-as-you-go power. This is known as ‘self-disconnection’. This comes as they confirm that the quality of customer service by energy providers has plummeted. The worst performing suppliers are Utilita, Boost Power, Ecotricity, Good Energy and Ovo.
Link: https://www.bbc.co.uk/news/business-61270970 – self-disconnections
The amount of money that households collectively owe to their energy suppliers has doubled in the past year to reach £1 billion, with a quarter (23%) of consumers now in energy debt, according to new research from Uswitch.com, the comparison and switching service.
British Gas research states that UK households could save an average of £147 per year by switching off so-called ‘vampire devices’ that drain power even when they are on standby. The Energy Saving Trust (EST) said consumers need to consider which devices they leave switched on. They used average costs of wattage from different manufacturers’ average models when left on standby to calculate its figures.
Research shows that a TV clocks up £24.61 per year, while a set-top box from Sky or Virgin Media can incur £23.10. Games consoles left on standby work out at an average of £12.17, while computers could cost about £11.22.
Selected others:
- Microwave: £16.37
- Shower: £9.80
- Washing machine: £4.73
- Printer: £3.81
- Phone charger: £1.26
British Gas says that its figures are in line with figures from the EST in terms of the percentage of electricity used by “vampire devices”. According to the EST, between 9% and 16% of electricity consumed in homes is used to power appliances when they are in standby mode. The British Gas research is based on 13 standard appliances.
Certainly, some food-for-thought in my household with the adult children, including boyfriends and girlfriends where I suspect that I have multiple offending devices on standby where games consoles, hubs, phone chargers and TVs feature prominently.
Link: https://www.bbc.co.uk/news/technology-61235367
Hybrid working
I found this article by Al Hughes of interest on hybrid working in terms of cultural challenges, which was a topic of discussion at the CCTA event and my discussion with Brian Corr, Director of Retail Lending at the FCA on Wednesday.
FCA April 2022 Regulatory Round-up
Nothing that we haven’t already covered.
Link: https://content.govdelivery.com/accounts/UKFCA/bulletins/314ec93
Money Charity – April 2022
Citizens Advice Bureaux across England & Wales answered 435,355 enquiries in March 2022, 3.7% up from March 2021. Debt was up 7.21% on 2021 and remained the second largest advice category with 72,115 issues, behind Benefits & Tax Credits (98,806). Debt represented 15% of all issues dealt with in the year to March 2022. The top three debt categories in March 2022 were fuel debts, council tax arrears and credit, store and charge card debts.
Link: https://themoneycharity.org.uk/money-statistics/
MoneyHelper
MaPS has produced new money guidance content to help people manage their money in uncertain times.
Link: https://maps.org.uk/moneyhelper/
Link: https://www.moneyhelper.org.uk/en/money-troubles/way-forward
MaPS – new consumer tool
On 28 April 2022, I attended a presentation by Daniel Kelly from MaPS around a new free tool they have been working on with Ernst & Young. I previously communicated that there is meant to be an event on 4 May 2022 and several on the circulation have asked where the link is. I have written to Daniel to get confirmation given that the 4th is not far away.
I spotted a few familiar names on the webinar, including representatives from CAP, Hope Macy, PayLink, PayPlan and StepChange. Here are my notes that I sent back to Daniel and Craig Simmons.
UK Finance has published ‘The future development of Open Banking Payments’
This report (attached) focuses in particular on Variable Recurring Payments (VRPs) and how they offer new ways to make regular payments. These can represent alternatives to direct debit and continuous payment authorities. It explores how variable recurring payments could be enabled commercially through a multi-lateral framework that provides for standardisation and a consistent customer experience. In the words of UK Finance, the report explores the upsides and downsides of such a framework and how it could be taken forward.
Findings from the DRCF Algorithmic Processing workstream – Spring 2022
This may be relevant for those using or intending to use Machine Learning (ML)/Artificial Intelligence (AI). In 2021, the Digital Regulation Cooperation Forum (DRCF) established an Algorithmic Processing workstream to explore the impact of algorithms across our sectors and their regulatory remits. The DRCF brings together the main bodies responsible for digital regulation in the UK Competition and Markets Authority, ICO, Ofcom and FCA. They collaborated on how to engage and coordinate on the regulation of the digital landscape.
The objectives of the DRCF
The forum has 6 objectives as set out in its launch document:
- collaborate to advance a coherent regulatory approach
- inform regulatory policy making
- enhance regulatory developments
- anticipate future developments
- promote innovation
- strengthen international engagement
As part of this workstream, they launched two separate research projects – one looking at the harms and benefits posed by algorithmic processing (including the use of artificial intelligence), and another looking at the merits of algorithmic auditing, as a way of documenting risks and assuring stakeholders that an algorithmic system behaves and is governed as intended.
In undertaking these projects, the DRCF members sought input from a range of stakeholders, including representatives from academia, civil society, government, industry, the public sector, and consumer groups.
In the next financial year (see DRCF workplan 2022 to 2023), they intend to undertake further activity in the field of algorithmic processing, looking more closely at how regulators might support algorithmic transparency, as well as what role regulators might play in the algorithmic auditing ecosystem.
Link: https://www.fca.org.uk/about/uk-regulators-government-and-other-bodies/drcf
Link: https://www.linkedin.com/posts/financial-conduct-authority_drcf-take-a-closer-look-at-algorithms-ugcPost-6925433291281993728-EfY6?utm_source=linkedin_share&utm_medium=member_desktop_web
Cyber-insurance
My thanks to Niran Seriki, Security Architect at Capgemini, for his weekly cyber security bulletin. Cyber insurance is a condition of bidding for many government tenders and may become increasingly expensive depending on your business model, where many firms have adopted a ‘digital first’ approach.
I picked up on this link around what insurers are looking for in terms of underwriting criteria. Whilst this is US focused, it will be applicable to UK players. On average, cyber insurance rates rose by 89% in the fourth quarter of 2021, according to Risk Strategies’ State of the Market 2022 Report. In line with the National Cyber Security Centre (NCSC) warnings, the insurance industry has been under increased pressure amid concerns the Ukraine war and the in prevalence of ransomware will lead to a surge in claims.
“Most insurance requirements still fall into basic cyber-security measures, what one would expect every company operating online to have in place,” – a quote from the CEO of a provider of cyber insurance for SMEs. At minimum, those measures include:
- Multifactor authentication (MFA)
- Backup
- Incident response plan
- Patching
- Cyber awareness training for employees
NCSC and allies have published advisory on the 15 most commonly exploited vulnerabilities in 2021.
Link: https://www.cybersecuritydive.com/news/what-cyber-insurance-companies-want-from-clients/621359/
Debt recovery changes in the US and the relevance to the UK market
I picked up on a post by C & R Software around Regulation F in the US that came in to play in November 2021.
On 30 November 2021, the Consumer Financial Protection Bureau (CFPB) enacted Regulation F as part of the Fair Debt Collection Practices Act (FDCPA). The FDCPA is a federal law that regulates the actions of third-party debt collectors who act on behalf of another person or entity. The purpose behind the FDCPA is to mediate the relationship between third-party debt collectors and consumers to encourage a cooperative environment.
The recent regulation F is a new modification under the FDCPA which has brought with it changes to communication and the transfer of information between collectors and consumers. Its aim is to eliminate abusive practices and ensure customers are treated fairly, which effectively removes the unfair advantage of debt collectors that use abusive practices. Regulation F also aims to ensure that consumers are given the right information to understand the costs, benefits and risks associated with debt.
Link: https://www.consumerfinance.gov/about-us/blog/understand-how-cfpb-debt-collection-rule-impacts-you/
What is a debt collection validation notice?
When a debt collector first communicates with you, or shortly thereafter, they’re generally required to provide certain information about the debt. When the information is provided in writing or electronically, it is called a validation notice, and it will generally include information like:
- Name and mailing information of the debt collector
- Name of the creditor to whom the debt is owed
- Account number (if any) associated with the debt
- An itemisation of the current amount of the debt that reflects interest, fees, payments and credits since a particular date that you may be able to recognise or verify with records
- The current amount of the debt as of when the validation notice is provided
- Information about your debt collection rights including how to dispute the debt
- This notice is meant to help you identify whether you owe the debt and whether the collector’s information about the debt is accurate. The notice must include a “tear-off” form that you can send back to the debt collector to dispute the debt or take other actions.
I was looking at this relative to the emergence of digital first strategies in the UK. I referenced this in a post by Steve Coppard that has picked up some traction.
Events
ComplyPort webinar on the FCA application process
The recording of the webinar discussed last week is now available. The webinar covered the key changes to the FCA authorisation process. It was designed as a practical guide for firms planning to submit an FCA authorisation application in 2022. I found it useful in confirming my position on what to expect under the enhanced regime discussed in the recent FCA 3-strategy and Business Plan.
Launch of ISO 22458 (consumer vulnerability) on 5 May 2022
As previously reported, I am attending the launch on 5 May 2022 in London. I am looking forward to catching up with a few of you that have confirmed their attendance on the LinkedIn post. I have provided the link to some of the promotional material.
VRS event on 14 June 2022
Elanev, PrinSIX, MorganAsh, VCX and VRS will be demonstrating how different solutions can work together in a cohesive way to streamline a customer journey.
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