DEMSA update: Consumer Duty / CP23-5 / IVA report 2022 / IMLT / DORA / Training / Events


Personal insolvency practitioners will be aware of important changes to SIP 3.1 (IVAs) that took effect last week and previously covered by DEMSA. The principal changes in the revised SIP 3.1 relate to the degree of emphasis on the IP’s responsibility to ensure that the debtor has received suitable advice prior to entering an IVA and during its implementation. This includes ensuring that the debtor understands all potential debt relief solutions available and that they are provided with adequate opportunity to consider the consequences and the options available before entering an IVA.

Money Charity debt statistics

After StepChange Debt Charity reported record volumes of debt advice sessions in January 2023, the The Money Charity has published its February report.


Citizens Advice Bureaux across England & Wales answered 469,854 enquiries in January 2023, 18.4% up from January 2022. Debt was the second largest advice category in January 2023 with 79,448 issues, behind Benefits and Tax Credits (104,944). Debt calls were 22.9% up compared with January 2022, while calls about Benefits and Tax credits were up by 18.5%. The top 3 debt categories in January 2023 were fuel debts, council tax arrears and credit, store and charge card debts.

With the new MaPS debt advice contracts commencing in February 2023, we will hope to see more MI around debt advice outcomes beyond the levels of deficit budgets. It is important to see the split of debt advice recommendations by debt solution in England & Wales for those with surplus budgets.  

More “Dear CEO” letters issued around Consumer Duty

Following on from the Sheldon Mills speech on 22 February and the FCA “Dear CEO” letters to the debt advice and debt recovery sectors on 21 February 2023, we saw yesterday the final letters issued to the Credit Union, Credit Broker, Mortgage Intermediary, Motor Finance and Retail Finance providers. Very common themes, but subtle nuances in the Annexes.

This comes as the Bank of England haven’t ruled out further interest rate rises. The FCA place a lot of stock in Financial Lives Surveys, where they quote that 27% of the UK population have low financial resilience. Credit Unions are likely to see greater demand for their services, from customers in more complex and challenging circumstances. As Trish Cassidy has pointed out, this requires closer collaboration with the debt advice sector and providers that support the sector, notably those regarded as ‘outsource’ providers.

The FCA want Credit unions to provide a level of support that meets their members’ needs throughout their relationship. This means that members should be able to realise the benefits of the products & services they buy and are supported when they want to pursue their financial objectives, when they are in financial difficulty and when they want to complain.

The financial and operational resilience of Credit Unions may be tested as more members get into financial difficulty and seek support.

As more Credit Unions move their services online, it’s important that the risks of cyber threats and consumer scams are managed effectively. They need to ensure that adequate systems & controls are in place to counter the risks of financial crime.

The FCA Financial Crime Guide: A firm’s guide to countering financial crime risks (FCG) and Financial Crime Thematic Reviews (FCTR) outline the steps Credit Unions must take to defend against financial crime.

Credit Unions that rely on outsourcing arrangements will also need to monitor and oversee third parties to ensure the risk of foreseeable harm to members is effectively managed. CRED 4.3.25G requires taking reasonable care to supervise these arrangements and obtain reassurance around the impact of outsourcing on its systems & controls.

See also  DEMSA update: FCA on intermediaries & financial promotions / Consumer Duty / Vulnerability / SFS / Events

Many rely upon third parties to provide critical IT services. Staff (often volunteers) should have sufficient skills & resources to oversee and stress test the outsourced activities; identify, monitor, and mitigate against the risks arising; and properly manage an exit or transfer from an existing legacy provider.

Much of this builds on the Credit Union event Chris Warburton hosted on 7 February for Credit Unions and Community Lenders that was supported by IE Hub, 4Most, Fair4All Finance, InBest, Stop Loan Sharks England and VRS. Many of the messages are common for small and medium sized firms, especially those with a distribution chain as we approach the next Consumer Duty milestone on 30 April 2023. I have focused in recent training and events around the complexities in amending your FCA registration and the support documents required, which are summarised above with minor updates to the deck from 2 March 2023 taking account of yesterday’s updates.


Product Assurance Frameworks

In October 2022, I published a thought piece around how Statutory Debt Repayment Plans (SDRPs – a new debt solution) would fit into the FCA Consumer Duty regime and more specifically PRIN2A.  

I have been running training now since July 2022 and this has become more refined with the passage of time and further FCA correspondence like the “Dear CEO” letters in February 2023 to the various sectors set out above. Having now run a number of sessions in collaboration with the DEMSA, Vulnerability Registration Service (VRS) and FourNet, we are now looking at Product Assurance Frameworks in more depth along with potential ‘sludge practice’ and ‘fair value’ assessments. We are now in a better place to look at what ‘good looks like’. This was brought to life on Thursday evening (before the first glass of wine) by Richard Lee at NICE CX-One playing a real-time vulnerability assessment and demonstrating ‘agent assist’ type tooling that Chris Jones at VCX has been pushing for some considerable time around real-time agent support around vulnerability identification and treatment. I am sure that Andrew Gething at MorganAsh will continue to see more and more interest in his vulnerability assessment tools with the additional sector letters from the FCA impacting intermediaries and those in the distribution chain actually dealing with the customer through a range of medium, including face-to-face.     

I believe that my thought piece may be a useful reference point for firms assessing their Debt Management Plan (DMP) proposition ahead of 30 April 2023 (next key milestone) and taking account of recent FCA feedback to the sector – both ‘Fair Share’ and commercial providers, where financial and operational resilience assessments form part of this process.

Support is at hand if required and tailored training or workshop sessions are available.  

England Illegal Money Lending Team (IMLT) – Annual Report

I think that Trish and Cath may become a regulator feature in the bulletin. I have copied them on the visible distribution as we are encouraging readers to take advantage of their awareness and training around Loan Sharks, especially after the FCA drew more attention to this in the “Dear CEO” letters. The Vulnerability Registration Service (VRS) has been highlighting some of their unique datasets and this is one of them.

FairSHARE Credit Union has just become a partner.

The report provides details of the victims IMLT supported in 2022. This includes insights into touch points in the victim’s journey prior to seeking support. There are some interesting demographics, including housing tenure, age and gender, where 60% of borrowers are female. A surprising number of homeowners at 16%, though housing association is the highest figure at 31%. 65% had dependent children and 31%were single parents. 8% were carers.

See also  DEMSA update: QA Frameworks / MaPS / Financial Crime / Insolvency Stats / Events...

There are some fairly shocking figures on suicide attempts and this reflects the importance of identification of loan shark activity where it is highly unlikely that victims will be able to engage effectively in regulated contact engagement strategies. To put this in context, 79% owed money to other lenders besides the loan shark, of which 39% were priority creditors. The average total debt excluding the loan shark was £8,624. A the FCA has highlighted in the “Dear CEO” letter to debt advice providers, we have to be very mindful of this in our engagements with consumers with multiple debts.

Please contact Trish for more details.


Colin Trend micro blog

My thanks, as ever, to Colin for picking up on key aspects of Breathing Space.

He brought to my attention – Mental Health Crisis Moratorium successfully challenged ( 

This shows that challenge to the Mental Health Crisis Moratorium (MHCM) part of the Debt Respite Scheme.  The inference here is that it overlaps with mental incapacity (Mental Capacity Act of England & Wales, 2005) whereby such a person protected in this scheme is in their best interests, given they lack the ability to make an informed decision, even after support. 

Colin commented that this was always his expectation when he first became aware of the concept of the MHCM.  Given the very small numbers of individuals utilising this remedy to date, it is perhaps surprising to read that such an issue was brought to the High Court.  However, the fact that this mental health practitioner used the MHCM on 4 occasions the outcome here is perhaps not that surprising. Colin argues that this case exposes the possibility of uninitiated individuals practicing as debt advisers in the mental health sector who can switch on this remedy with ease, but are outside of FCA regulated regime.

The High Court has now had to grapple with the Regulations and their scope for abuse by individuals seeking to evade enforcement of judgments against them. In Kaye v Lees [2023] EWHC 152 (KB) the Court cancelled a Mental Health Crisis Moratorium and granted an injunction preventing the subject of the moratorium from seeking a further moratorium under the Regulations. The Judge held that “the High Court has the power to restrain potential abuses of the scheme by placing sensible limits on the ability to access it“.

This is an important decision that sets out clear boundaries on the use of these new and relatively untested regimes. It will be welcomed by those who find themselves seeking to recover debts owed by individuals, especially where those individuals are likely to use any means to prevent them from doing so.

There have been 1,836 Mental Health Breathing Spaces since May 2021 (1,212 in 2022) and that is without the January 2023 figures, which are still blank on the spreadsheet that I have just accessed. That is an average of 92 per month.

VRS Consumer Duty Training – Next dates in March 2023

I love great feedback and we have already had good testimonials, including from Perch Group. Rob Sands, Head of Compliance, at Opos has now made my day:

“I thought it was an exceptional session, delivered expertly and with many thoughtful insights and viewpoints for us to consider whilst we’re in our Consumer Duty implementation stage. Kevin is a consummate professional when hosting these sessions and his attention to detail and thought provoking analysis on the expectations of the regulator will certainly stand us in good stead as we move our implementation plan forward.”

See also  DEMSA update: Consumer Duty countdown / MaPS deficit budgets / Social value in debt resolution / Events

I was trying to avoid any low door frames after this. I was brought down to Earth (local park) by Natasha on the early Friday morning ‘critical friend/daughter’ dog walk after the FourNet and NICE CX-One Consumer Duty event at the Tattu in Manchester on the Thursday, where I spoke about the Consumer Duty. Having managed to stick to time, I thought I was doing well! Apparently, she was just resting her eyelids during my slot. Barry Hind and Neil Reddin boosted my confidence a little later in the day on route back to Lincoln (without any tyre or mechanical incidents – where I returned my wife’s car brimming with Diesel).

Rob has been appointed to the board of the Credit Services Association (CSA). I would like to extend Scott Dawson’s congratulations from DEMSA.  

What has been interesting in the VRS and FourNet events is the cross-section of FCA regulated firms and firms regulated by other bodies. We have seen BPO providers and firms regulated by the Gambling Commission, SRA and RPBs (personal insolvency) as part of wider supply chain management discussions, which has been a priority focus from FCA feedback of late.       



VRS, Data on Demand and TransUnion supported the CCTA event last week. Simon Gregory focused on Cost of Living, Consumer Vulnerability and preparation for Consumer Duty. He presented a joint offer for CCTA members from the Vulnerability Registration Service and Data On Demand in partnership.

FourNet and NICE CX-One Consumer Duty event in Birmingham – 29/3/2023

Barry Hind is driving this –

Credit Strategy Credit Summit 2023 – 27/4/2023

New date of 27 April 2023 confirmed at the QEII Centre. Hopefully, Roma Pearson is still speaking from the FCA – she is still listed. I am on with Sabyasachi Mukherjee, Head of Credit Risk at Monese. I need to check whether Sam Challenger, Head of Collections & Customer Experience at Billing Finance, is still speaking. Alex Marsh from Klarna is speaking in the Open Banking strand that I chaired last year. Tasneem Bhamji, recently at PayPlan and now Strategy & Innovation Director at Lloyds, is speaking about utilising AI to improve customer outcomes in the Innovation strand. Paul Lamont, Innovation Lead at Experian, is covering ‘Improving customer accessibility through consented data sharing’. You need eyes and ears everywhere. I am hoping to have a few roving reporters at the event.  


Angel Advance has picked up on Klarna charging late payment fees. This may be an interesting topic to pick-up on in the Collections Strategy session along with regulatory scrutiny as the sector moves under FCA supervision and independent redress through the Financial Ombudsman Service.  

Long horizon scan – UK Credit & Collections Conference – 14/9/2023

The CSA is now taking bookings for this year’s UK Credit and Collections Conference in association with Webio. The 2023 event will be held once again at the Radisson Blu, Manchester Airport on Thursday 14 September 2023. Always an enjoyable event with plenty of networking. I am available to speak.


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