In today’s bulletin
- General update
- MaPS call for evidence – deficit budgets
- CCS – Social value in debt recovery
Tory leadership elections are coming to a close and immediate focus will be required on the economy and protection measures for businesses and consumers as we face a real crisis with so many small businesses under threat. Some of these are integral to our lifestyles, especially for those living outside of cities. My village isn’t blessed with that many amenities and I suspect that several will be under serious financial pressure.
Scams still seem to the forefront and Russell from CIVEA has highlighted risks of enforcement agent imitators.
Despite the economy and pressures on household budgets, Nationwide has said that UK house prices rose by 10% in the year to August. The mortgage lender said the typical property price had risen by £50,000 in the past 2 years to £273,751.
The Insolvency Service – Forward Thinking
Following the success of last year’s Forward Thinking conference, The Insolvency Service is planning the next conference on Friday 18 November 2022. The theme for the conference is ‘Forward Thinking: Insolvency Response in uncertain times’. They are now inviting insolvency practitioners and anyone else with an interest in insolvency law and related areas to submit their abstracts for an academic or technical paper for presenting at the conference. The deadline for submission of abstracts is Wednesday 14 September. Maximum of 500 words.
UK Finance Blog on Consumer Duty
I was looking for some useful tips for my interview next week with Chris Warburton around how to build an implementation plan for an outcome focused regulator. The Blog reflects that Outcome-Based Regulation (OBR) does not dictate a prescribed end state that firms should achieve and this makes implementation planning significantly more challenging. This was a key question from Jason Wassell, CEO, at the CCTA conference to the FCA in April 2022 this year.
UK Finance believe that a solid implementation plan should focus on 4 key elements:
- Definition of the target end state as an input to the gap assessment
- A focus on evidencing outcomes
- Considering governance central to how all the elements of consumer duty come together
- Remediating products & services to meet the enhanced standards
Any informed risk-based approach should start with a fair value assessment using the metrics defined during the target state definition. Final quote:
“And to take your technology teams and/or providers in the data space along from the start as firms will rely heavily on them to drive the right insights to quantify the outcomes.”
There is now only 2 months left to the 31 October 2022. Support is available if you are need of assistance, whether this be help with the framework or extra pairs of hands with knowledge of PS22/9, FG22/5 and FG21/1.
Autumn newsletters – creditor collaboration
Both IE Hub and PayLink Solutions have issued August newsletters which cover major topics that we have covered in the weekly DEMSA newsletters. They also reference great examples of collaboration with creditors that is driving better engagement with indebted and/or vulnerable consumers.
I picked this guide up on LinkedIn from Debt Free London. This guide is England & Wales only. We are seeing an increase in consumer financial education activity around their entitlements. This extends to plugin tools on a broad range of websites that are consumer facing. This will probably extend to pro-active targeting of consumers that may need a nudge to take pro-active action if they at risk of problem debt or heading towards a deficit budget.
Summer update from Fair4All Finance
Their focus over the last 6 months has been to sustain momentum in scaling the provision of affordable credit, building the evidence base as to what works in designing and delivering products and services that improve outcomes for people and getting up and running on pilots to meet gaps in product provision.
PayPlan and Refuge best practice guide
Last month, PayPlan worked with Refuge, the UK’s largest national domestic abuse charity, to produce a Best Practice Guide. This covers domestic and economic abuse. The 32-page report can be downloaded at the link below.
There are recommendations from the review, which have led to the development of the joint Best Practice Guide. These are:
- Banks, creditors and debt advice organisations should invest more in training frontline customer services staff on how to recognise and respond to domestic and economic abuse and ensure clearer pathways to specialist support teams so that survivors of economic abuse are able to restore and increase their financial stability
- Banks, creditors and debt advice agencies should form close links and partnerships with the violence against women and girls’ sector to better understand the needs of survivors. This innovative partnership between Refuge and PayPlan has shown how specialist financial support can have a positive impact on the experiences and outcomes for survivors of economic abuse
I am sure there will be synergies with the MaPS call for evidence (below) around the need for better collaboration and data sharing, which is something that underpins the majority of vulnerability and inclusive design initiatives.
MapS call for evidence – deficit budgets
Further to the DEMSA bulletin on 1 September 2022, Credit-Connect has picked up on the DEMSA quote.
The purpose of this MaPS call for evidence is to understand what help can, or could, be offered where a client presents with a deficit budget, as well as what MaPS can do to enable this help to be given. This is obviously a really important topic impacting the whole debt advice sector and more widely for those in the debt resolution space undertaking robust income & expenditure assessments. Where affordability assessment providers (e.g. IE Hub, PayLink Solutions Embark) used by creditors, debt buyers and DCAs establish a deficit budget then different customer journeys need to be considered where a direct transfer into a debt advice process may not identify viable debt remedies. If these providers have already explored income optimisation and entitlement to benefits and social tariffs with their integrated partners (e.g. EntitledTo, InBest, IncomeMax, Policy in Practice) then alternative strategies need to be considered. This call for evidence will be useful in that respect and the wider topic of protocols for dealing with priority creditors where the deficit doesn’t allow the payment of essential services like energy.
Rachel Duffey and Steve Coppard are discussing SDRPs at the imminent Credit Services Association conference on 15 September (see events). The AdviceUK response (representing 650 member organisations) by David Hawkes can be found at the link below. They think that only a very small percentage of clients seen by AdviceUK members will be eligible for the plan. They estimate that this figure is likely to be less than 5% of debt clients. This is consistent with some of the other responses, including PayPlan. They have indicated that between 30% to 40% of consumers they see have a deficit budget.
Social value in debt recovery
On 30 August 2022, the Crown Commercial Services (CCS) put up a webpage entitled ‘Incorporating social value in debt recovery’. CCS has added some mandatory requirements incorporating social value into their Debt Resolution Services (DRS) framework. A number on the circulation are on this framework. Social value is becoming an increasingly important aspect of government procurements, which includes disruptive technologies (e.g. Open banking, speech analytics, AI/ML) and cyber-security/resilience.
The webpage references The Money and Mental Health Policy Institute and that 50% of adults in problem debt have a mental health problem and 1 in 5 people with mental health issues are in problem debt. CCS have been working with the debt advice sector to provide insight into the daily issues they see. This deepened their understanding of the issues poor practice in debt recovery can cause.
Suppliers are required to use the GOV.UK Debt Management Vulnerability Toolkit and Money and Pensions Service Money Advisor Network to ensure that those in need of professional support are identified early and effectively supported through free debt advice. This is likely to be linked to the MaPS call for evidence where deficit budgets will become increasingly common and some public sector debts will rank alongside regulated private sector debts.
Some of the messaging is remarkably similar to the FCA Consumer Duty, where CCS require debt collection firms to get feedback from consumers. This allows CCS to identify good practices and to react to any decline in consumer outcomes. Some of the reporting will be consistent with FCA expectations. For example, provision of annual social value reports showing the impact of their work covering social value KPIs and metrics that are likely to be referenced in social value policies and frameworks, which sit under ESG policies and frameworks. This has been a common theme from DEMSA bulletins from the initial FCA consultations around ‘Duty of Care’.
CCS has highlighted the direction of travel:
- more support for vulnerable individuals
- more training for public sector organisations
- more insight into financial hardship
They have included quotes from MaPS and StepChange.
“It is vitally important that the public sector debt recovery process achieves fair and sustainable outcomes for those struggling with problem debts. We have been delighted to work with CCS, from the outset, to help embed social value within their DRS framework.”
“Good practice in public sector debt management is enormously important, both because of the number of people who may need help and the important role of the government in setting standards. We know that problem debt can cause terrible harm that creates large social costs. The CCS social value approach is absolutely vital to embedding investment in good practice and support for people facing financial difficulty.”
Matt Hooper is the author. He is speaking at the CSA event on 15/9/2022
Link: https://www.crowncommercial.gov.uk/news/incorporating-social-value-into-debt-recovery – posted 30 August 2022
I believe that I successfully navigated my Trustfolio interview with Lee Usher and Peter Wallwork on 30 August where I resolved some confusion around the pros & cons of Rugby League versus Rugby Union, discussed men’s hair products and addressed world peace. We did manage to discuss a few industry items as well. Due to me premiered some time in September 2022 after we cut the majority of the pre-amble. I am not sure that I kept my answers short and punchy (there wasn’t any conflict).
Chris Warburton is interviewing next week as we look at the countdown to the Consumer Duty implementation planning window ending on 31 October 2022. We look at some of the tools and processes involved for smaller regulated firms to satisfy their board that the major risks have been considered and the resourcing required for transformation programmes of this scale whilst maintaining business-as-usual and other strategic challenges, some of which are also to regulatory deadlines. The FCA will be looking at who has been identified to ‘champion’ these initiatives and how thinly spread some key resources are.
I spoke at the event last year, but I am not able to attend this year as I am away. Plenty of coverage of Consumer Duty, CCA reform, SDPRs, Vulnerability and more. The FCA will also be in attendance throughout the day.
VRS webinar – Consumer Duty – 21/9/2022
Over 200 registered for this event, which builds on the successful event on 14 June 2022. As previously featured, this webinar will cover off some of the tools and solutions available to FCA authorised firms and how help is available to identify the ‘needs, characteristics and objectives of customers’ including those who are vulnerable. We have participants from Aveni, Data on Demand, Delehanty Consulting, IE Hub, MorganAsh, VCX and VRS.
Credit Union webinar – 28/9/2022
This is a free webinar targeted at the Credit Union sector for key stakeholders and those holding senior management roles (e.g. SMF1, SMF8, SMF17) in a Credit Union of any size or location in the UK where they are subject to FCA and PRA regulations. It is relevant to other firms supporting this sector (e.g. debt advisers). I have attached my Blog as Kevin Still Consulting. Chris Warburton has been running a survey and some of the initial summary data looks important to those serving local community services. We have good representation at director level.
Speakers include Helen Lord of the Vulnerability Registration Service (VRS), Adam Thornber of Bridgeforce and Mehmet Akseki of Ceverine. Bridgeforce has extensive experience of working with Credit Unions in the US where they work with a third of the Top 30 Credit Unions and representing over $300 billion in assets. Digitisation is a key theme where operating costs are a real focal point. It has been timed to run during the Stop Loan Sharks week. Stop Loan Sharks England have been raising awareness with back to school activity and the financial pressures that this can cause.
Pre-Event Survey: A Credit Union Perspective on Servicing and Collections
Vulnerability Summit – 5 October 2022
I am looking forward to supporting these Vulnerability Registration Service (VRS) events in October ahead of the first key FCA Consumer Duty milestone of 31/10/2022 and the cost-of-living crisis biting further. As reflected in the CCS update above, inclusive design and treating vulnerable customers fairly is a crucial part of service delivery in both debt advice and debt resolution.
The FCA non-handbook guidance (FG22/5) and the vulnerability guidance (FG21/1) needs to be re-aligned to this with PRIN6 and the 6 TCF outcomes being dis-applied by July 2023. KYVC checks need to be reviewed and new KPIs established to be able to robustly answer many of the questions posed by the FCA in FG22/5.
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