I produced a horizon scan (attached) just before the New Year that has been posted on LinkedIn. I have read the forecast by Chris Warburton and a more technical view from Ollie Boreham on CX developments in 2023. FourNet partner, PCI Pal, has also provided their predictions around payment and security trends in 2023. Both PCI Pal and Ecospend featured in major projects at HMRC when I was a Programme Manager in 2021. I was also interested in some of the US thoughts on collections trends in 2023, though the weather in the US over Christmas was horrendous and dominated news.
Secure open banking payments, personalisation, omni-channel engagement, voice activated assistants, better call routing, predictive interventions and sentiment analysis all look to feature strongly in 2023. Whether these are focused on improved customer service or reduced cost to serve will be the acid test for consumers, notably those identified as having characteristics of vulnerability.
My interest is around what will drive more digital engagement by ‘undecided consumers’ in 2023 as we enter a tough month for consumers with low financial resilience after the festive period. I have looked at factors that may be key to increasing data sharing and wider digital engagement by reluctant consumers, notably in the arrears management and debt resolution space, including provision of debt advice. My underlying theme is that 2022 didn’t manage to find the right ‘value exchange’ for consumers to want to share their data and/or digitally engage further down the product/service lifecycle. The Consumer Duty may give more impetus to this in 2023. We are also seeing more and more digital engagement (IoT) in the healthcare space because of under-investment in the NHS, where there will be a high proportion of vulnerable customers/patients and carers.
The Bank of England’s Money and Credit statistics for November, released today, show an increase in consumer net borrowing from £0.7bn to £1.5bn, driven by an additional £1.2bn of credit card borrowing. The continued rise in net borrowing suggests mounting inflationary pressures are forcing people to turn to credit to get by. With further net borrowing increases expected following the festive period, there is potential for an increase in the number of people vulnerable to problem debt.
From launch in May 2022, I have been a big supporter of the BSI ISO 22458 kitemark (consumer vulnerability and inclusive design) and January 2023 should see the first cohort of accredited firms in the Financial Services, Energy and Water sectors.
Data requests and updated Vulnerable Customer Policies
A number of firms will have received data requests from the FCA at the end of 2022 and these will have included the capture of statistics on vulnerable customers. In previous data requests, this has extended to levels of quality assurance (QA) and the QA sampling (e.g. risk-based). Consumer Duty implementation planning will have focused on data analytics, higher risk customer segments and product assurance reviews around how those with characteristics of vulnerability are catered for in your business model. It should not be unexpected for the FCA to request further information about a firm’s Vulnerable Customer Policy.
- how the firm identifies vulnerable customers
- how this is trained out and routinely assessed at a front-line level as part of wider Conduct Rule changes by July 2023
- what the firm’s process is when dealing with vulnerable customers
- any special considerations in terms of communication, customer service and wider accessibility
- access to third party data sources, data sharing and tooling
- use of specialist support teams
- referrals to external providers
- what additional services are offered for vulnerable customers
Conduct Rule training as part of SM&CR refresher work is a Q1 2023 activity. Vulnerability refresher training at a number of levels is probably another Q1 2023 priority once policies have been updated, especially if you are a ‘manufacturer’ with a distribution chain where the April 2023 is an important Consumer Duty milestone.
If anyone is interested in the Consumer Duty training on the training platform that Chris Warburton has set-up then please contact him directly – firstname.lastname@example.org. This is £40 per online trainee or bespoke pricing for a group of trainees. We have had a number of directors of regulated firms go through the training modules and feedback has been positive to-date. This is particularly focused around key FCA questions in FG22/5 around vulnerability provisions in PRIN2A. We will be deploying further training through Q1 2023.
Income optimisation and benefit checking is another ‘hot topic’ for 2023.
InBest is supporting a Credit Union and Community Banking event on 7 February 2023 that Chris Warburton and I have been setting up as a follow-up to the survey and event from 28 September. During 2022, InBest experienced significant growth through a number of partners on the circulation and the increased focus on the cost-of-living crisis. In total, Manu was able to onboard 47 firms onto their benefits platform and helped 80,000 people access £404m in unclaimed benefits. Along with providers like EntitledTo, IncomeMax, Policy in Practice and Turn2Us, we are seeing these types of tools and services being embedded into core customer engagement platforms and customer journeys more generally. The MaPS deficit budget consultation that closed in December highlighted the scale of the challenge in the debt advice sector. The November 2022 StepChange client data (attached) reflects that 33% of the people they advise have no surplus income. These figures are closer to 50% for National Debtline and Citizens Advice.
My ‘Consumer Value eXchange’ touches on the NHS pressures and the potential rise in usage of Internet of Things devices to remotely monitor patients at risk. More than 7m are on waiting lists for non-urgent operations.
Representatives from the public and private sectors are attending today’s forum at Downing Street, alongside chief executives and clinical leaders of NHS organisations, local areas and councils from across the country, plus medical and social care experts. High levels of flu and Covid, a wave of strike action and a cost-of-living crisis are also putting huge pressure on the health service.
The government in England has already announced plans to roll out virtual ward beds so that more people can be treated at home, a new service to save thousands of ambulance call-outs to people who have fallen, and more funding to improve emergency care and adult social care. More than 90 diagnostic hubs, housed in venues such as football stadiums and shopping centres, have also been opened to reduce the queues for tests, checks and scans. The hubs enable GPs to refer patients for procedures like MRI and CT scans without the need for a hospital visit.
The government says it wants 40% of all diagnostic activity to take place in the hubs by 2025. It also aims to eliminate 18-month waits by April 2023 and 12-month waits by March 2025.
Data on Demand partnership with Connexus
I spotted Stuart’s post on the Housing Association sector. It looks like another good example of collaboration and wider use of data. This was summed up by the Head of Communities at Connexus, who are a rural housing group providing high-quality affordable housing throughout Herefordshire & Shropshire.
Gary Darlington, Head of Communities at Connexus said:
“It’s important that with the current cost-of-living crisis that we at Connexus understand more about our customers, especially those who may be facing economic hardship. Data on Demand will enable our colleagues to quickly prioritise their efforts and reach out to those who need it most.”
Simon Gregory, Sales Director for Data On Demand, said:
“Our alternative consumer insights are now established within the private sector and especially within Financial Services for supporting vulnerability assessment. It’s great to see forward thinking Housing Associations like Connexus utilising available insights to help customers most in need. We look forward to supporting the team in what will hopefully turn into a long-term partnership delivering better customer outcomes.”
Local community solutions that ‘join up’ several providers supporting the same vulnerable customers seems a really important step in the ‘tell us once’ journey. Getting momentum across the UK is also important so that pro-active support is not a postcode lottery.
ONS insights from December 2022
The latest Office for National Statistics (ONS) insights from 15 December 2022 show that the price of food and non-alcoholic beverages in the UK rose by 16.5% in the year to November 2022. This rate is well above headline inflation and has risen for the last 16 consecutive months, from negative 0.6% in July 2021. As consumers across the country are affected by the rising cost of living, more will face increasing financial stress in the New Year. This is particularly true for lower income households. They may also be more susceptible to fraud, scams or making poor financial decisions. Digital journeys can trigger different behaviours where speed of action may adversely influence informed decision making.
Electricity prices in the UK rose by 65.4% and gas prices by 128.9% in the year to November 2022, despite the introduction of the government’s Energy Price Guarantee. Ofgem has provided information around the energy price cap and what will happen going forward. The energy price guarantee is a temporary additional measure to protect consumers from the recent significant increases in wholesale gas prices. The guarantee was put in place on 1 October 2022 and will last until April 2024.
High fuel prices earlier in 2022 have been slow to reduce and many working citizens are hybrid working and shopping online. Whilst this may reduce insurance premiums and travel costs, they put pressure on energy usage and other household expenses that are rising steeply. It also puts considerably more reliance on the continuity of essential services to the home like electricity, broadband and postal services, which have been subject to industrial action.
My thanks to Andrew Gething for spotting an article today under ‘Health & Protection’ entitled ‘data is key to evidencing Consumer Duty price and fair value outcomes. Speaking on the regulator’s latest podcast, Ed Smith (Head of Competition) explained what the FCA will be looking for from firms in how they document and evidence value assessments and how the FCA will enforce the Consumer Duty where firms fail to comply.
StepChange November 2022 client data
I had a catchup with Peter Tutton yesterday around a range of topics including, the MaPS deficit budget consultation, the FCA CONC review, the FCA Debt Packagers consultation (CP21/30) and The Insolvency Service personal insolvency reform now that the HM Treasury SDRP consultation has been paused. We discussed the latest November 2022 client data report (attached), which continues to highlight the cost-of-living crisis as the top debt reason for people seeking debt advice. 33% of advice recipients have a deficit budget. The graph below reflects a key message that I frequently relay around the need to focus on household composition, especially where there may be joint debts and holistic debt advice may need to be at a ‘couple’ level. This is important when 33% of the people presenting themselves are couples.
21% cited cost-of-living as their primary reason for contacting StepChange, where women (23%) are more likely than men (17%) to cite this as a reason. A ‘lack of control over finances’ (17%) is the second most common reason for debt, which is cited by 20% of men, compared to 15% of women.
The data also shows the continued positive effect government energy bill support is having – the proportion of new clients with electricity arrears fell another percentage point month-on-month to 27% in November, following a three-percentage point drop from 31% to 28% between September and October. While the proportion of new clients in arrears with gas bills has marginally increased by one percentage point to 24%, this is still down from 26% in September.
The report is worth reading around a number of key dimensions, including; digital engagement, housing tenure, employment, gender, age, product & arrears mix. Distinguishing between social housing and private rent seems an important metric to capture as part of a data gathering process.
Google debt advice advertising – 16/1/2023 deadline
On 5 October 2022, Google announced a significant additional measure to protect both consumers and legitimate advertisers in the UK. The Google Ads Financial Products and Services policy was updated from 6 December 2002 to require that all advertisers be FCA authorised to show debt services advertisements. This has meant that Insolvency Practitioners will no longer be able to rely on regulation by a Recognised Professional Body (RPB) to run debt services ads in the UK. Advertisers must successfully complete the updated verification process by the time enforcement begins on 16 January 2023.
We are expecting an update from the FCA imminently on the outcome of CP21/30 around debt packager activities.
Quick call out to John McMahon as Vice President of Global Sales at C&R Software. I hope we can catchup in the New Year.
Another for Kelly Lawrence at Royal British Legion.
Citizens Advice cost-of-living briefing – 19/1/2023
Chief Executive Dame Clare Moriarty will be joined by some exciting guest speakers to be announced shortly.
Credit Unions and Community Banking event sponsored by IE Hub on 7/2/2023
We are currently updating survey results from September 2022 around ‘Handling Increased Arrears’. Whilst arrears levels have remained largely stable, January and February, post-Christmas holidays, are normally a time when consumers are stretched. This period is likely to be especially important this year, as an indicator for the outlook in 2023, not to mention the processing demands of higher volumes.
In anticipation, we are updating our questionnaire, and benchmark survey, to provide some updated insight, to see if things continue to change and monitor the situation.
The financial resilience of mothers central to family budgeting
I picked up on this Great Western Credit Union (GWCU) research. Recent research conducted by GWCU and University of Bristol has highlighted the financial lives of mothers and barriers to their financial resilience to develop solutions. They make reference to the Sharon Collard and Jamie Evans report from July 2022 around Financial Wellbeing. Increasing inflation is now adding to the pressure for parents and a recent financial tracker found that 37% of single parents were in serious difficulties with their finances.
James Berry, CEO of Great Western Credit Union, said:
“These are unprecedented times, and these findings help to spotlight the financial situation of many women across our region. Mothers make up a significant proportion of our membership and so we must understand their struggles and goals to ensure that we’re supporting them in the best way possible. We are helping to build financial resilience with tens of thousands of people in the South West, so if you need a place to save or borrow, Great Western Credit Union is here for you.”
Ascendant Cost-of-Living Crisis Webinar – 12/2/2022
More case studies from local authorities relating to tackling the cost-of-living crisis.
VRS – Local Authority event on 13/2/2023
On the theme of data sharing amongst local authorities, this important event will feature several case studies, including Kent.
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