DEMSA update: Consumer Duty / Financial Crime / MaPS SFS tool / Vulnerability / Cost-of-Living / Events

In today’s bulletin

  • General update
  • Consumer Duty
  • MaPS open source SFS tool
  • Fighting Financial Crime
  • The Vulnerability Lens
  • Lowell Financial Vulnerability infographic
  • Events

General update

The confirmation of Liz Truss as new PM and the decisive action around energy pricing has been a significant event this week that looks to have been welcomed and seen as a major factor in addressing rising inflation. How this actually impacts businesses and consumers is being worked through, as many have flagged concerns for local businesses and the knock-on impact of this on UK consumers. The Federation of Small Businesses has said the business side of the government plan was still “sparse on detail”.

In a busy schedule, the PM announced that the government will limit energy bill rises for all households for 2 years. A typical household energy bill will be capped at £2,500 annually until 2024. This covers England, Scotland and Wales, with an equivalent scheme to be announced in Northern Ireland.

Chart showing energy price guarantee

With the scheme estimated to cost £150 billion, the government will compensate energy firms for the difference between the wholesale price for gas and electricity they pay and the amount they can charge customers. As ever, debt advisers will need to understand the mechanics of how this is delivered. The government plan to continue with the previously announced £400 energy bills discount for all households. Taken together, the government said this “will bring costs close to where the energy price cap stands today”. Energy firms now need to implement this in a relatively short timescale.

The Joseph Rowntree Foundation (JRF) has said the poorest families still faced an £800 shortfall in household income.

With reference to the ESG agenda, the government will launch a review to ensure the UK is meeting its Net Zero 2050 target in “an economically-efficient way”, given the altered economic landscape.


UK Finance has published its September economic insight, where they make the point that one thing on most people’s minds in September is a winter of unprecedented energy price rises. Whilst written before the government announcement on energy price capping, there are some fairly significant statements around rising inflation and the potential for interest rates to rise to 4% by the second quarter of 2023. They have focused on business energy price rises by sector.


Three UK expands number of zero-rated websites to further support customers during cost-of-living crisis

Just spotted this on LinkedIn .

Three UK announced this week that it is zero-rating 7 websites that offer financial advice and guidance, furthering its support for customers of Three during the cost-of-living crisis. Customers on Three’s mobile network will be able to access StepChange, Business Debtline, National Debtline, Citizens Advice, Money Advice Plus, MaPS and Money Helper without being charged for their data. These websites are in addition to 8 zero-rated charity websites that Three’s customers already have access to: Samaritans, Refuge, National Domestic Abuse Hotline, Rape Crisis, GALOP, NSPCC, Women’s Aid, Male Survivors Partnership and Survivors Trust.


CIVEA Autumn 2022 Newsletter

There are a number of articles of interest in this, including an article entitled ‘Working together to tackle the digital divide’. The newsletter also covers council tax collection rates. Russell Hamblin-Boone, CEO of CIVEA, looks at the challenges of the cost-of-living crisis in his sector. Entitledto also look at the impact of income optimisation.


PayPlan working with Stop Loan Sharks England

With the Stop Loan Sharks week looming, PayPlan has produced an ‘everything you need to know about loan sharks’ page.

This will also be very topical at the Credit Union event on 28/9 (see below) where the Illegal Money Lending Team (IMLT) has been promoting the event. The England Illegal Money Lending Team (IMLT) is running its national Stop Loan Sharks Week campaign from 26th September to 2nd October 2022 to highlight the help available to those who have been targeted by loan sharks, as well as increase awareness of this hidden crime in communities.

The #LetsTalkLoanSharks campaign aims to remove the shame and banish the stigma around illegal money lending by encouraging conversations among families, friends, neighbours, customers, colleagues and communities.   


Consumer Duty

Chris Warburton interviewed me on Thursday around the Consumer Duty and the countdown to the implementation planning deadline of 31 October 2022. This builds on my FCA Consumer Duty Blog from 30 July 2022 when PS22/9 and FG22/5 were published on 27 July 2022.   

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The teaser covers some of the key challenges for senior managers of small and medium-sized regulated firms in a very short time window to 31 October 2022 around transformation planning that is robust enough to present to the regulator. Firms in the debt purchase, debt resolution and debt solution sectors will have a range of challenges where a risk-based assessment is essential taking account of the FCA expectations laid out in policy statements, non-handbook guidance and ‘Dear CEO’ communications that we have covered in previous DEMSA bulletins.

There is a strong call to action, where the bandwidth of key resources (e.g. SMF16 and SMF17) may be stretched with other demands on their time as well. This is important in terms of accountability and the over-arching risk management framework.

In the longer interview, I have discussed the impact of dis-applying PRIN6 (and the 6 TCF outcomes) and PRIN7, which I have touched on in a previous Blog.

Frank Brown in a recent Blog has also confirmed that many firms are experiencing challenges in assessing what level of detail needs to be presented to the Board, to meet the October 2022 deadline. He has drawn attention to the quote below:

“should have agreed their implementation plans and be able to evidence they have scrutinised and challenged the plans to ensure they are deliverable and robust to meet the new standards”

As I have suggested in the teaser and full interview, Frank has also directed firms to ask themselves the questions set out through FG22/5 (non-handbook guidance). He has also focused on business readiness and embedding new processes into business-as-usual, including training & competence at a frontline level under the Conduct Rules. In the first instance, getting the key stakeholders on the same page is a priority and that is why we have promoted the SM&CR and Consumer Duty refresher training for those holding SMF roles. There are many synergies around FCA expectations in the interim permission transition phase and thematic reviews before full permissions in 2014-2017 for the debt solution sector (those holding client money) when the Approved Persons regime was in place.     

FCA Consumer Duty (PS22/9) and Social Value in debt resolution

I have recently posted a Blog around how many key themes need to be inter-linked, where ESG is also a strategic thread for many firms and its importance has grown significantly in the last 12-18 months, particularly those bidding on various government frameworks. By way of example, we covered the Crown Commercial Services (CCS) Debt Resolution Services framework last week.

MaPS open source SFS tool – 21/9

MaPS are inviting interested parties to the launch webinar of the new tool developed by MaPS to empower organisations in creating a digital self-service experience for customers to gather in their data ahead of a debt advice session. This focuses primarily on the Income and expenditure data held within the SFS.

The tool has been designed with flexibility in mind so that any agency adopting the tool can imbed it into their own customer journey. With configurable colour, icons and supporting text along with access to the code for further development. The tool comes with an API to be able to transfer the collected information easily into an agencies CRM software.

The presentation will include details on how to apply for access and permission to use the tool from MaPS. If you have any questions please contact the SFS Support team at Several on the circulation have been undertaking testing of the new tool.   

The Presentation will be on 21 September 12:00 – 12:45 and you can register with the following link.

Fighting Financial Crime

Alongside all of the other challenges that firms face in a difficult trading climate, the increased prominence of Financial Crime and Cyber-security/resilience has become another recurring Board level topic where this impacts the entire supply chain. As with the emergence of ESG, identifying weak links is becoming a priority, whilst encouraging smaller firms to participate in these ecosystems. This presents challenges for all involved, especially with increased regulatory focus on ‘critical service providers’ that may not actually be regulated by the likes of the FCA or PRA.

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Sarah Pritchard, FCA Executive Director, spoke at the Financial Crime Summit (1LOD – First Line of Defence) on 7 September 2022. This has highlighted the linkage between the cost-of-living crisis and criminal activity.

Key points:

  • The FCA is working with firms and agencies to share intelligence and quickly respond to evolving threats to spot and stop financial crime
  • The cost-of-living crisis will lead to criminals trying to exploit people even more through scams such as loan fee fraud and APP facilitated scams
  • Fighting financial crime is a key FCA priority and are taking action at pace on areas from spotting sanctions-busting to driving improvements on money laundering controls and raising consumer awareness through Scamsmart campaigns

These will all undoubtedly become areas of scrutiny around FCA supervision, which may be very topical in the Credit Union sector where small organisations are regulated by the FCA and PRA. They have been subject to FCA portfolio letters in March 2022 around AML/Financial Crime controls. There will be a linkage in terms of Consumer Duty transformation planning around consumer outcomes and protecting consumers that may be more susceptible to these type of crimes, especially around digital engagement where the customer is not deemed ‘tech-savvy’, financially mature or highly literate/numerate. How financial education is delivered will be important and we have discussed how ‘friction’ can be introduced in some customer journeys to avoid inappropriate ‘self-certification’. Strong customer authentication needs to be balanced with ease of use of apps and other tools used by consumers in a personal and micro business capacity.

Sarah Pritchard uses language like “unleashing” in terms of new tools and rapid delivery. This is designed to improve firms’ controls and the FCA issuing warnings where they see harm, flagging up names on their warnings list more quickly and “firing up” Scamsmart campaigns. Firms clearly need to be in tune with this and Financial Crime policies & procedures updated to keep pace with this change. Another pressure on the SMF17 in smaller firms where this role is required. In many smaller firms, it is undertaken by a director holding an SMF3 role where an SMF17 isn’t a required role.

She confirmed that the FCA shared their findings from their recent review (covered in a previous DEMSA bulletin) of challenger banks, as the risks there are no different than in the whole retail sector. This is a fairly clear warning that impacted firms need to assess whether they have similar weaknesses, especially FinTech firms with high growth strategies.

Cost-of-living crisis

The FCA is asking firms to plan how they are going to respond to the risks of the cost-of-living crisis. She has flagged scams like false access to rebates from utility companies. The FCA is anticipating a potential rise in people being recruited to act as money mules, where they are asked to transfer money through their accounts by strangers in exchange for a payment. This may also be linked to economic abuse more widely.

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She posed the question “As you all sit here today, have you asked what your firm is doing to calibrate your financial crime controls to changing risks in the cost-of-living crisis?”

The challenge has been laid as to whether regulated firms are doing enough to raise their awareness of crimes such as APP fraud, pension scams and ghost broking. Having previously highlighted in last week’s bulletin that Enforcement Agents are being impersonated, this is not just limited to FCA regulated activities.

OPBAS is increasingly seeking to test how effective professional body supervisors are in the money laundering supervision of their sectors. OPBAS is currently consulting on expanded guidance, in a consultation which closes later this month. This is very relevant for insolvency practitioners.


On 7 September, LSB published the review of adherence to the CRM Code. LSB has confirmed the strides made forward in their effort to stamp out transactions resulting in Authorised Push Payment (APP) scams, though areas of inconsistent application persist, according to the latest review. Signatories to the code (launched 2019) have made progress in scam prevention. They have confirmed progress on consumer protections at a time when financial security is of paramount importance to households across the UK, with the cost-of-living crisis front of mind for everyone.

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Emma Lovell, CEO of the LSB, said:

“APP scams have a lasting impact on victims’ mental health and their trust in others. Across industries, a greater focus on scam prevention is needed to stop both the harm caused to customers and lost funds going on to fund serious, organised crime.

“Signatory firms, under the Code’s requirements, have an improved focus on preventing APP scams from happening in the first place. We would urge those not signed up to do so, providing their customers with these increased levels of protection.”


The Vulnerability Lens

I was impressed by Helen Pettifer’s FRSA new creative work (featured below). I think many others do as well from the traction on the LinkedIn post. Worth a read. For financial services firms, ‘My Vulnerability Lens’ covers key aspects of the FCA’s guidance on the fair treatment of vulnerable customers.

Lowell Financial Vulnerability index

John Pears, CEO of Lowell, has posted on LinkedIn the latest Lowell Financial Vulnerability infographic. I have attached the release. This provides insight from over 9.5m Lowell UK customer accounts showing credit use in Q2 2022 was the highest it has been since the early months of the pandemic

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DebtStream – FinTech 5.0

Congratulations to Gareth, Martin and team for being one of the 51 companies selected for our Fintech 5.0 programme.


On a related topic, I spotted Dylan of IE Hub in the ‘huddle’ at the ‘FinTech for Good: Tackling the Cost-of-Living Crisis’ event. He also seems quite close to the bar.

CSA conference – 15/9/2022

This is nearly upon us. 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

The Vulnerability Jigsaw's Next Piece...'Consumer Duty'

Over 250 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


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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). 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

Event: Credit Unions: Member Engagement and Debt Resolution is Changing – How to Stay Ahead (and remain in control)

Vulnerability Summit – 5 October 2022

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Vulnerability training events through October 2022

As discussed above, 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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