DEMSA Platinum Jubilee bulletin: Economy / Debt reports / Open Banking / Ransomware / FOS / Events

General update

The risk of a recession has risen, ONS has warned, after the economy shrank during March 2022 just as the UK had started the recovery from the pandemic. Higher prices are “beginning to bite”, with consumers spending less and cutting down on car journeys due to high fuel costs.

As previously reported, the cost-of-living crisis has forced a significant response from the Chancellor on 26 May 2022, with further financial support for low-income households. Regulators are taking decisive action around firms being more pro-active with social tariff schemes and tailored forbearance.

Bank of England (BoE) – Money & Credit – April 2022

Key points:

  • Net borrowing of mortgage debt by individuals decreased to £4.1 billion in April, down from £6.4 billion in March. Mortgage approvals for house purchases also decreased to 66,000 in April from 69,500 in March. Both measures are slightly below their 12-month pre-pandemic averages up to February 2020.
  • Consumers borrowed an additional £1.4 billion in consumer credit, on net, of which £0.7 billion was new lending on credit cards

The annual growth rate for all consumer credit increased to 5.7% in April from 5.2% in March; the highest rate since February 2020. The annual growth rates of credit card borrowing and other forms of consumer credit were 11.6% (the highest since November 2005) and 3.4% (the highest since March 2020), respectively. These figures exclude BNPL.

According to The Money Charity report, the average interest rate on credit card lending bearing interest was 21.40% in April 2022. This contrasts with the BoE figures, where they quote the effective rate on interest bearing credit cards as 18.08% in April 2022. The effective interest rate on interest-charging overdrafts in April was 20.07% and a personal loan to an individual was 6.52%.

UK Finance figures relating to February 2022 showed that 53.8% of credit card balances were bearing interest.

TDX Consumer Debt Report

TDX Group has published a consumer debt report around ‘How the pandemic changed consumer debt profiles’. It features input from Rachel Duffey, CEO of PayPlan, and Deborah Ware, formerly of FWG.

I reviewed the report following the Equifax webinar I attended on 24 May 2022. Beth Whelan of TDX Group and Rachel Duffey presented on the 24th. Beth is featured on page 5 and Rachel on page 9.

TDX Group identified that they had observed a 5% uplift in digital engagement around arrears management.

Beth Whelan, Director of Strategy and Transformation, TDX Group:

“Over the last couple of years, we put together a range of solutions fulfilled through a panel of specialist DCAs, who specialise in working with vulnerable consumers to ensure our clients are able to protect their vulnerable consumers.”

I have previously covered the V+ service panel and the Crown Commercial Service’s (CCS) Debt Resolution Services (DRS) framework. We also recently featured Pastdue Credit Solutions, who are on the DRS framework and collect for HMRC. Pastdue has recently adopted the Inicio AI conversational tool for completing an SFS.

StepChange – Debt advice client insights

StepChange published in May 2022 their debt advice client insights from April 2022. The report shows that the cost-of-living is now the second most commonly cited reason for debt, up from the third most common in March 2022 and the sixth most common in 2021.

The proportion of clients citing the cost-of-living as a driver of their problem debt is now 15%, more than twice the 7% cited in September 2021.

Fewer clients accessed full debt advice in April 2022 (12,500) compared to March 2022 (around 15,000. Some of this can be attributed to seasonal increases in demand, where the period after Christmas often sees rising levels of arrears on unsecured credit. Online advice volumes have consistently been higher than telephone advice in the period November 2021 to April 2022 (page 5).

32% of clients had a deficit budget at the point of advice in April 2022, up by 3% on April 2021. There is a high proportion of female customers (63%) and those in the 25-39 band represent the highest age group (47%). Private renters represent the largest housing tenure group at 35%, which is slightly up on 2021 and 2022 year-to-date (34%).

Energy arrears continue to slowly increase. The priority arrears levels in the report (page 8) are reflective of some of Rachel Duffey’s comments for April 2022 at the recent Equifax event that DEMSA attended.

FCA speech at Financial Inclusion Summit 2022

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On 31/5/2022, Sheldon Mills delivered a speech around keeping pace with rising costs and improving financial inclusion for UK consumers. He made frequent references to the Consumer Duty, where new rules will be published in July 2022 ahead of implementation in April 2023.

He quoted a number of hard hitting statistics from the last Financial Lives survey which highlights the magnitude of the challenge around financial education and providing effective and targeted solutions for low-income households or those significantly impacted by the cost-of-living crisis coming out of the pandemic. DEMSA is hoping that the updated survey data will provide more data on the characteristics of vulnerability including poor health, a life event, low resilience or low capability. It should allows us to find correlation with income levels, social deprivation scores and personal characteristics like gender, age, disability or ethnicity. He said that qualitative and quantitative information are both necessary for understanding financial inclusion and enabling coherent policy choices at a firm level.

He focused on opportunities from Open Banking (OB) in the UK and how this supports wider access to financial services. He reflected that data sharing does come with risks of misuse, data loss and algorithmic discrimination (i.e. ML/AI), though he recognises that these can be appropriately managed.

By way of example, he referenced the development of budgeting and planning tools, pre-populated debt advice journeys and support for those who have ‘thin credit’ files. These are key areas of innovation for DEMSA affiliates.

The FCA will jointly oversee with the Payment Systems Regulator the next phase of OB with the aim to unlock further benefits of data & technology whilst managing associated risks. They will also work with BEIS as it progresses the ‘Smart Data’ initiative.

There was clear warning to consumers not to use credit to fund high-risk investments (e.g. 14% of crypto purchasers used some form of borrowing to fund their investments).

The Money Charity

Citizens Advice Bureaux across England & Wales answered 345,717 enquiries in April 2022, 1.2% up from April 2021. Debt was the second largest advice category in April 2022 with 56,535 issues, behind Benefits and Tax Credits (78,612). Debt calls were 2.33% up and represented 14.9% of all issues dealt with in the year to April 2022. The top 3 debt categories in March 2022 were fuel debts, council tax arrears and credit, store and charge card debts.

In Scotland in March 2022, Citizens Advice Scotland gave 93,368 pieces of advice, with debt advice being 13% of the total. Debt advice in March 2022 was the second largest category after benefits.

In Northern Ireland in April 2022, Advice NI’s Debt Action service dealt with 248 cases involving debt issues, covering £1.1m of debt. The top 3 debts were mortgage arrears, credit card and personal loans.


According to ONS, private rental prices in the UK rose by 2.7% in the 12 months to April 2022, up from a revised 2.4% for the 12 months to March 2022. Over the year to April 2022, private rental prices increased in Northern Ireland, Wales, Scotland and all the English regions. Northern Ireland (6.5%), East Midlands (4.0%), the East and the South West (3.7%) saw the highest rates of increase. The lowest increases were in London (1.1%) and Wales (1.7%).

The median rent in England across all private rental property types for the 12 months to 30 September 2021 was £755, according to the Valuation Office Agency and ONS. In London it was £1,425.

Richard Lloyd becomes FCA Interim Chair

Richard Lloyd OBE took over as Interim Chair of the Financial Conduct Authority Board on 1 June 2022.

He was keynote at the BSI event on 5/5/2022. His resume reads well relative to the inclusive design ambitions of ISO 22458 and the FCA Consumer Duty, where final rules are due to be published in July 2022.

He joined the FCA Board in April 2019 and has been Senior Independent Director, Chair of the Board Risk Committee and Chair of the Oversight Committee. Alongside his role at the FCA, he also chairs the Independent Parliamentary Standards Authority and a Council member of the Advertising Standards Authority (ASA). He was a founding trustee of the Money and Mental Health Policy Institute.

Richard led Which? as executive director from 2011 to 2016. Prior to this he was CEO of the world federation of consumer organisations, Consumers International; head of policy at the housing charity, Shelter; and worked for two years in No10 Downing Street as a special adviser to the Prime Minister.

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He was awarded an OBE in 2019 for services to the economy and consumer rights.

IE Hub announces new chairman

Mark Thundercliffe will be joining IE Hub as Chairman of the Board. He has over 34 years of experience in corporate, retail and business banking. He has built and developed dynamic financial services companies, products, customer propositions and distribution capabilities in both developed and emerging markets.

IE Hub’s CEO, Dylan Jones, said:

“IE Hub has gained significant traction over the last 12 months and is now at a point where it needs a reputable Chairman to help further refine strategy in a rapidly expanding and complex market.”

Support for banking customers in financial difficulty – UK Finance

UK Finance has commented that banks and other finance providers are ready to support their customers and will work with them if they are having trouble paying their mortgage, credit card or personal loan.

As ever, they are recommending that consumers contact their lender as early as possible through a range of contact medium offered by the bank, which in practice may not be that accessible or have capacity to service demand.

The Q & A discusses ‘tailored support’ and what a good outcome may be where this is focused on individual or household circumstances and based on affordability. UK Finance has stated that customers will never be asked to pay more than they can afford. Lenders must agree a form of support before it is applied to the relevant account.

For credit cards and personal loans, this can be short-term or longer-term support, depending on circumstances. It can include:

  • accepting reduced payments for a short period where your circumstances are expected to improve
  • accepting reduced payments through a longer-term repayment plan where you are experiencing more severe financial difficulties
  • considering whether refinancing the outstanding credit at an affordable payment rate is an option which will be in your interests.

For mortgages, a customer may be offered one of the following, depending on circumstances:

  • part payment plans
  • mortgage term extensions
  • temporary transfer to an interest-only mortgage
  • deferral of interest due
  • the addition of what is owed to the total mortgage balance (known as capitalising)

Lenders should explain the options available and what the tailored support being offered means, including how any arrangement will be reflected on someone’s credit file. This assumes that customer facing staff have been fully appraised of these options.

Where someone has several debts across different lenders or are having trouble paying other bills, UK Finance has discussed the benefits of seeking debt advice. In addition to debt advice, they have focused on the role of income optimisation to establish entitlement to any state benefits or tax credits. We are beginning to see more creditors point consumers to both services.

Ring in the changes: Spain to make call centres pick up within 3 minutes

Rising concerns around response times by call centres was highlighted by Carolyn Delehanty in her post around call waiting times and she provided a link to a Reuter’s story about the Spanish government approving a draft bill setting a 3-minute limit and giving consumers the right to be attended by a person, not a chatbot.

The Guardian has picked up on the story. The fines look very light unless the accumulate in significant volume. Failing to abide by the law will result in fines of between €150 (£128) and €10,000 and up to €100,000 if the problem affects vulnerable consumers or if found to be recurring.

Rise in Ransomware – UK Finance report

Earlier in May 2022, UK Finance published a blog around the financial impact of cyber-risk. They have reflected that the last 2 years have highlighted the financial and operational impact of cyberattacks on businesses of all sizes and sectors, and their supply chains.

Critical infrastructure is under digital fire, with reports showing that ransomware attacks have increased by 486% over the past 2 years. Cybercrime is estimated to have cost the world economy more than $1 trillion.

On 25 May 2022, UK Finance published policy & guidance on ransomware which represents one of the most significant and growing international cyber threats, with serious economic, security and public safety consequences for the financial sector and the UK economy at large.

They reference the work done by the Ransomware Taskforce, a part of the Institute for Security and Technology (IST), on a comprehensive framework for action in response to the rise in ransomware.

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IST state that ransomware is no longer just a financial crime, it is an urgent national security risk that threatens schools, hospitals, businesses and governments across the globe. This obviously gives rise to the potential for significant consumer detriment.

In April 2021, IST published a ‘Combating Ransomware’ framework developed by the Ransomware Taskforce (RTF). The RTF report includes 48 recommendations that together form a comprehensive framework to address ransomware. These include priority recommendations that are the most foundational and urgent. By way of example, they recommend that the cryptocurrency sector that enables ransomware crime should be more closely regulated. UK Finance has supported the expansion of regulations to cover non-bank entities that facilitate the ransomware business model, including money servicing businesses and crypto exchanges.

RTF has just published a May 2022 update report. This includes the Russian invasion of the Ukraine and coordinated action against the REvil cybercrime gang. Both reports are fairly detailed.

UK Finance has also recommended greater UK financial services involvement in the global RTF. UK Finance would like to work closely with the National Cyber Security Centre (NCSC) and the Financial Sector Cyber Collaboration Centre (FSCCC) to support the ongoing workstreams tasked with delivering standards, frameworks and campaigns to improve awareness and disrupt ransomware activities.

Ombudsman News – Issue 171

In this edition, FOS share their strategic measures update which outlines performance in FY 2021/22 and the results from their temporary outcome codes initiative. They also highlight the new online guidance for consumers and for financial businesses about their approach to vehicle breakdown cover complaints.

Some highlights include:

  • Cutting the unallocated backlog of cases, the front-end queue, from around 90,000 to just over 37,000
  • Reducing our total stock of cases from 164,529 to 112,000, the best performance in 3 years
  • Resolving 218,740 cases against a target of 220,000. Taking into account the 16,000 Amigo cases we are unable to progress, FOS resolved 14,740 more cases than they set out to
  • Improving productivity by 12%
  • Achieving a staff engagement score of 79%, against a target of 70%
  • Continuing the roll-out of technology improvements and putting IT contracts in place to transform their customer interface

FOS has also published the results of the temporary outcome codes initiative launched in November 2021 aimed at encouraging businesses to proactively settle complaints more quickly. Their work and more than 90 businesses resulted in 6,800 cases being settled and redress secured for customers of up to £22m. This included more than £10m in “authorised” scam complaints, with over 2,000 victims being refunded the money they had lost.

CMA publishes findings of ‘Lessons Learned’ review into Open Banking

The Competition and Markets Authority (CMA) has published the findings and recommendations of a review by Kirstin Baker, one of its independent non-executive Directors, to identify lessons from Open Banking for the CMA’s approach to designing, implementing and monitoring remedies in its market investigations.

The review makes 7 recommendations to the CMA:

1. Build more effective Board oversight & risk management of the E2E strategy for complex remedies

2. Set out processes and governance for CMA Board and Executive oversight of the delivery and implementation of remedies

3. Consider questions relating to implementation at the remedies design phase

4. Ensure key factors are considered where a remedy establishes a new entity or large and enduring CMA function

5. Include gateways in the remedy delivery and implementation process

6. Implement effective and agile internal governance and stakeholder engagement in remedy delivery and implementation

7. Conduct an evaluation case study of complex market investigation remedies


Citizens Advice, Innovate UK and Knowledge Transfer Network (KTN) are holding an event in London on 20 June 2022 designed to give people who share their aim a strong foundation to build innovative services that benefit all consumers, particularly those who experience the most harm.

The Ofgem Strategic Innovation Fund (SIF) is providing around £450m for innovation in energy networks from 2021-2026, in partnership with Innovate UK. The SIF Round 2 has set challenge areas for energy networks and their relevant partners.

This session will focus on the challenges to develop Novel approaches for better identification, support and inclusion of vulnerable and disadvantaged consumers.

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