DEMSA update: Consumer Duty PS22/9 published / Implementation planning / SDRP consultation / Vulnerability ecosystem / Events

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General update

I will start with a call to action (CTA), which I was reminded of during a networking event during the week.

I have been engaged with MaPS this week looking at the future demand for debt advice. Russell Bradshaw ( is a statistician at MaPS and is looking for as much help as he can get on looking at the drivers of future demand, including the ‘accelerators’. Russell is on leave for a week, but will be speaking with some of the debt solution providers on his return. He is very keen to speak to some of the debt purchasers, DCAs and BPO providers around some of the pro-active campaigns ongoing to get consumers to engage with their organisation, debt advice providers and/or affordability assessment providers. We have featured a number of collaborative case studies with firms like InBest, IE Hub, IncomeMax/Arrow, PayLink Embark and ReachOut. I am hoping that Auden, Firstsource, Hoist, Lantern, Lowell, Moorcroft, Monzo, Perch, Sigma, Tesco and Wescot etc. can help. This is really important to the funding of debt advice going into 2023, planning for SDRPs and wider horizon planning.

TransUnion published a very useful update on Q2 this week featuring some economic insight and dashboards. Well worth reviewing around the cost-of-living crisis and distinguishing between impacted segments and those that seem to be relatively unaffected, which may be at the heart of determining how the debt advice demand will be reflected. I shared with Russell the recent Paylink article reflecting changes in demographics they have seen in 2022, notably with households with higher levels of income.


I have referenced the Yonder research (link below) commissioned by the FCA, which includes delays to engaging in debt advice and lack of awareness of free advice providers. It builds on some of the FCA Financial Lives material published in February 2021.


Details of £400 energy payment to households revealed

The government has announced how all households in England, Scotland and Wales will receive £400 to help with rising fuel bills this autumn. The money, part of the Energy Bill Support Scheme, will be paid in 6 instalments. Households will see a discount of £66 applied to their energy bills in October and November, and £67 a month from December to March 2023. How the money is received will depend on how they pay their bill.


The Money Charity July 2022 stats

The Money Charity has focused on increased spending on credit cards in order to cover essential living costs means with more people getting into unsustainable debt. At the end of May 2022, outstanding consumer credit lending was £202.2 billion, £4.8 billion more than in May 2021. The Bank of England has shown that credit card borrowing in June 2022 grew at the fastest rate in nearly 17 years, at an annual rate of 12.5% – the fastest pace since November 2005.

Within the total, outstanding credit card debt came to £61.1 billion, an 8.39% increase (£4.7 billion) in the year to May 2022. Credit card debt averaged £2,197 per household and £1,155 per adult. This is likely to be low for customers seeking debt advice where there is a high probability of multiple cards. This is supported by StepChange saying 65% of new clients in May 2022 reported having at least one form of credit card debt.

Advice on Problem Debts

Citizens Advice Bureaux across England & Wales answered 390,227 enquiries in June 2022 with debt the second largest category with 60,542, behind Benefits & Tax Credits at 86,454. Top 3 debt issues were fuel debt, council tax arrears and revolving credit. In Scotland, debt was second to Benefits & Tax Credits with 9770 cases.


For the first time, June 2022 saw the rising cost-of-living being the most commonly cited reason for debt among StepChange Debt Charity clients, with 18% alluding to it as an underlying cause of their financial problems, according to StepChange’s latest monthly report.

There was an 104% monthly increase in visits to the benefits calculator (4,400 visits) and a 600% increase in visits to information about hardship payments (2,500 visits) which includes information about Universal Credit (UC), Jobseeker’s Allowance (JSA) and Employment and Support Allowance (ESA).

A similar number of clients received debt advice for the first time in June as in May, with around 14,000 new clients in each calendar month.



Cost-of-Living dashboard

Citizens Advice has launched their first cost-of-living dashboard, to give a near real-time insight into the problems people are facing. This blog summarises some of their key takeaways.


Loan fee fraud partnerships campaign

The FCA will be launching a loan fee fraud partnerships campaign on 1 August – 5 September 2022 in response to the rising cost-of-living which has created increased vulnerabilities in the consumer credit space.

The partnerships campaign aims to educate and raise awareness of loan fee fraud amongst consumers, employers and member organisations. This is to encourage them to check if a loan provider is authorised before taking out a loan and how best they can protect themselves against loan fee fraud. We have a developed a partnership toolkit which features, social media assets, social media copy, A4 poster and a staff briefing document.

C & R Software – Arum approved

Congratulations to C & R Software, provider of Debt Manager, for their Arum approval renewal.


Consumer Duty PS22/9 published

Further to the DEMSA bulletin on 27 July 2022, the Duty provides clarity on the FCA expectations and that regulated firms must focus on their customers needs. A ‘joined up’ approach across supply chains will be important and regulators have recently focused on critical service providers. Having searched on the word ‘debt’ fairly early on, I was disappointed that there were virtually no references to our sector despite the cost-of-living crisis. How distributor (debt advice provider) and manufacturer (debt solution provider) arrangements align in our sector is still subject to other consultations around debt packagers and principal/ARs. This is complicated by some being regulated and other not. Accountability still remains vague, especially where the outcome of the debt advice may only crystallise several years later. This may be particularly relevant with the introduction of SDRPs where the DAS/DPP equivalent of a Continuing Money Adviser (CMA) hasn’t been thought through as yet or the implications of The Insolvency Service being a payment distributor exempt from CASS 11 requirements and subject to FOS jurisdiction.

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The CSA has reacted to the Duty, notably around the impact on debt buyers where they aren’t a ‘manufacturer’. I suspect that there will be a number of grey areas where an account is closed with the original creditor, but open with the debt buyer. The extract below should help debt buyers, collectors and debt solution providers in terms of better customer journeys when an account is assigned. I have responded to the CSA blog.  

Application of the Duty to firms that purchase a product or service book (3.19…)

To assist in future sales of product and service books, the FCA is introducing rules to require that, in general, a firm selling a product or service book would need to provide information to the firm buying the book to help them comply with the Duty.



The Duty forms part of the FCA’s transformation to becoming a more assertive and data-led regulator. With firms assessing how they’re meeting their customers’ needs, the FCA will be able to quickly identify practices that don’t deliver the right outcomes for consumers and take action before practices become entrenched as market norms. DEMSA has engaged with the FCA pathway team around the future usage of digital debt advice and other disruptive technology trends that are emerging.

In a shift in position from the consultation paper, the FCA is giving firms 12 months to implement the new rules for all new and existing products and services that are currently on sale. The rules will be extended to closed book products 12 months later, to give firms more time to bring these older products, that are no longer on sale, up to the new standards. 

As previously reported after engagement with the FCA after the consultation closed, the FCA will expect tangible business readiness plans aligned to the new July 2023 deadline and a probable ‘show & tell’ after October 2022.

Average customer

Consumer organisations, including the Financial Services Consumer Panel, expressed concerns that developing communications with reference to the average customer would mean that they do not meet the needs of many customers, particularly those with characteristics of vulnerability.

I am collaborating with firms like Aveni to get the key messages out to the various sectors that we represent ahead of October 2022.  

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FCA expectations of firms during the implementation period

Firms must make full and effective use of the longer implementation period, with the necessary changes to policies, process, governance and culture put in place. They have set out a milestone approach and I have translated into plain English for our sector:

  1. Before the end of October 2022, to have completed a ‘gap analysis’ and produced transformation plans to be compliant with the Duty which should collection of the cost of transformation and the key MI and outcome-focused KPIs being measured aligned to FG22/5 (handbook)
  2. The FCA will be very interested in new T & Cs and how these will be applied to pre-existing and new customers – customer facing collateral and the language used will be important going forward  
  3. By the end of October 2022, regulated firms should have agreed implementation plans fit for FCA inspection and maintain oversight of their delivery plans, to ensure the implementation work is sufficient to meet the Duty standards
  4. Debt solution providers should have completed all the reviews necessary to meet the 4 ‘outcome rules’ for their existing open products and services by the end of April 2023
  5. Debt solution providers to share key information with debt advice providers in their distribution chain 3 months ahead of the implementation deadline to enable all firms to comply in time
  6. Debt solution providers engage with the FCA if they are considering withdrawing any products or services due to the Duty, so that the FCA can identify if there are any potentially significant impacts on consumers

The FCA has helpfully reminded firms to report any major issues identified ahead of the deadline to them under PRIN 11 and SUP 15.3.11R. If you are considering withdrawing or restricting access to products or services in a way that will have a significant impact on vulnerable consumers then this will need to be notified. This will probably require a further review by debt solution providers of which customer segments they can service themselves and which may be referred to free-to-consumer providers, who may or may not be able to deal with these customer segments. This has been an issue since the initial Thematic Reviews. The firm level ‘fair value’ tests will determine whether some customer segments, particularly impacted by the cost-of-living, would be better suited to a different debt remedy or provider.

The FCA has recommended a risk‑based approach and to prioritise the implementation work that is likely to have the biggest impact on consumer outcomes, including the most significant communications (e.g. changes to T & Cs, replacing TCF policies and other consumer facing documentation). The board needs to re-assure themselves that they are on track at each milestone. This will require consideration of what record keeping and MI is sufficient to evidence this to the regulator.    

The complexity of our sector with personal insolvency regulations also being reviewed in the same period and SDRPs being introduced really doesn’t help this exercise. It is bizarre that an SDRP won’t be subject to a fair value assessment, especially if the consequence of fee capping is worse customer service and potentially consumer outcomes where ‘revocation’ may become more abrupt and result in higher complaints. Splitting the roles of the debt adviser and payment distributor look like they are a recipe for ambiguity and highlight many of the issues raised by respondents about accountability in the distribution chain. In this instance one key party, The Insolvency Service, won’t be regulated or subject to FOS.

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It is probably worth doing refresher training on SM&CR and COCON ahead of October 2022 (which is readily available), as the FCA has stated their expectations of governing bodies to oversee implementation and ensure compliance with Consumer Duty align with requirements

under the SM&CR senior manager conduct rules in our Code of Conduct sourcebook (COCON), and the requirements within the SYSC sourcebook on senior management arrangements.

I have just updated my ‘Consumer Duty CV’ if anyone is interested.

“During the implementation period, firms should expect us to ask them to share their approach to monitoring the Duty with us. This is so that we can understand what information, data, and insights they are planning to gather and what change programmes they have in place to deliver these insights. We will feedback any useful insights to the industry as a whole, to enable them to learn from others, improve their own approach and build best practice.”

SDRP consultation

I have final meetings with the IPA SERL committee, UK Finance and various debt solution providers this week before DEMSA submits its response to the HM Treasury consultation on SDRPs. I have had a number of calls and meetings this week.

If anyone has any final comments or observations then I am happy to receive these.

It is fairly apparent that take-up is likely to be significantly below the current HM Treasury impact assessment from 2025 and that the cost of technical delivery and business transformation will be considerable, especially for players actually administering SDRPs and for creditors generally. On the debt solution side, it is very difficult to envisage any form of cost recovery for the set-up costs and bedding in of a new debt solution where there will be teething problems, as there were with the Statutory Debt Respite Scheme, but on a different scale where the payment distribution aspects haven’t really been considered properly outside of those who already have client money permissions.

At this present moment in time based on the current framework, it feels like there will be a very limited choice of SDRP providers unless some fundamental parameters are changed. It is also clear that urgent action is required ahead of October 2022 to establish viable approaches to dealing with priority debts, notably energy and council tax. This may be within or outside of existing debt solutions like a DMP. This is pressing and acute. It can’t wait until late 2024.

There appears to be good alignment between the creditor and debt advice responses. These need to be laser focused on the key challenges and strategic priorities around the cost-of-living crisis where the FCA has made their position crystal clear through ‘Dear CEO’ letters, interventions and general press releases in the public domain around better engagement by consumers and the need for tailored forbearance measures.     

‘Vulnerability ecosystem’ respond to ‘Dear CEO’ letters and Consumer Duty

DEMSA has been very supportive of the collaborative work of a number of affiliates around supporting customers in vulnerable situations and promoting the inclusive design and ‘fair by design’ principles promoted in PS22/9 published on 27 July 2022.

Helen Lord of VRS has coordinated a response around the recent ‘Dear CEO’ letters and Consumer Duty, with contributions from Aveni, Carolyn Delehanty, Data on Demand, Elanev, IE Hub, MorganAsh and VCX.  

Whilst PS22/9 reflects a short 3-month extension for regulated firms to be ready by July 2023, they have reinforced that transformation plans need to be ready for inspection by October 2022. Rhetoric is no longer an option and tangible change programmes need to have been developed and tested. As Chris Fitch recently presented to the Collaboration Network, there are many searching questions you need to ask yourself and your firm. You may not like the initial responses.

Help is at hand. Most of the firms referenced have also been looking at the new BSI ISO 22458 international kitemark (consumer vulnerability and inclusive design) which is closely aligned with the challenges firms are facing around evidencing positive outcomes. The BSI team are on hand to help. I attended the BSI event on Tuesday 26 July targeted at the Financial Services sector. We have several affiliates committed to this kitemark.

Natasha Bambridge of BSI explained that inclusive design can broaden product or service penetration. This is one of the benefits highlighted in the ISO 22458 collateral. None-the-less there is a risk of unintended consequences that was highlighted by many of the respondents to the FCA consultation on Consumer Duty, including DEMSA.

Financial exclusion

The FCA is not requiring firms to follow an inclusive‑design approach but, in the Guidance, they suggest firms may wish to consider it. You can interpret this as you wish, especially for those holding higher risk permissions.  

Unintended consequences

The withdrawal of products or services for certain customer segments, such as higher risk consumers.

The FCA has stated in PS22/9 that they do not want to see firms reducing access to appropriate products and services that offer fair value to their target markets. This can be a challenging dilemma for commercial firms like debt solution providers, where the regulator has subjected the sector to 2 Thematic Reviews.

Chapter 7 says that where a product or service does not have any financial or non‑financial cost to the consumer (e.g. debt advice funded through other sources), they would not expect firms to do a value assessment. I expect the opposite to be true where a consumer is actually charged a fee for an equivalent service. The SDRP consultation has opened a potential can of worms where the recoverable administration costs are considerably less than in a DMP, which is likely to reduce the quality of customer service and use of consumption-based services (e.g. transaction costs for credit reports, open banking, significant correspondence costs). Outcome-based regulation is meant to look at the customer experience and aspects like interest & charges freeze rates, complaint levels, plan completion rates, speed of response (e.g. available capacity) and customer survey results. This point seems to have been missed under the ‘fair value’ umbrella.

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The FCA does not necessarily expect firms to quantify non‑monetary cost and benefits. But, they do expect firms to at least provide qualitative consideration of these factors, especially if these are a significant part of their business models.

The FCA’s Consumer Duty: what is foreseeable harm?  And why does it matter?

Chris Fitch has posted on the Consumer Duty wearing his MAT hat and with an ESG pre-amble. Worth a read.


FCA research into CMCs from July 2022 regulatory round-up

This was entitled ‘FCA multi-firm work on CMCs and financial claims’.

Given a number of references to CMCs and the Financial Ombudsman Service in PS22/9 (Consumer Duty policy statement), this communication in the FCA July Regulatory round-up is timely. There are definitely aspects of the Consumer Duty where respondents felt that lack of clarity may give rise to increased complaints and/or attract new claims areas for CMCs. Complaint levels will be a key focal point around whether good outcomes are being delivered. The debt advice sector witnessed a few years ago the spike in complaints (not upheld) when a CMC was involved in our sector.  

The FCA has investigated whether, post-PPI, some CMCs have moved into new claims areas without the necessary expertise. Their review focused on several firms operating in complex areas like investments claims, found none had moved into new areas, while 2 had stopped taking on new claims altogether. They did find weaknesses in how some firms were identifying and handling complaints and recognising vulnerability. This may create opportunities for the ‘vulnerability ecosystem’. CMCs are regulated FCA firms and engagement is required where properly initiated. Inevitably, you will find cases where there is a mutual customer and that customer may be flagged as vulnerable on your CRM system. With PPI claims, the debt management providers often found cases where the claim would not result in cash payments and the customer had to fund a CMC invoice where compensation was primarily an offset of the debt.     

I am sure that many firms will be concerned around the PS22/9 response around ‘good outcomes’. As part of my review of PS22/9, I looked at the aspects where the FCA appear to have gone ahead with original drafting despite feedback from their own team (Financial Services Consumer Panel), the industry and consumer groups. The Consumer Principle is a fundamental example that may challenge those in the vulnerability ecosystem when looking at what a good outcome means and whether equivalence can be achieved across the spectrum, which was a point that Chris Fitch majored on in the Collaboration Network Vulnerability Summit.

As well as acting to deliver ‘good customer outcomes’, firms will need to understand and evidence whether those outcomes are being met. The FCA disagreed in PS22/9 that the term ‘good outcomes’ is too subjective. They believe that it is an objective standard and they think the rules and guidance that make up the Duty are clear about their expectations and what is required of firms acting to deliver good customer outcomes.  

Thoughts welcome. This is where ISO 22458 may add more granularity. We probably need to look at some of the KPI/KRI measures from a QA Framework perspective.

Council tax collection

Last week, I featured the link to the CIVEA publication featuring a foreword by Lord Lucas. The matter of collection of council tax and other priority debts has been very topical. DEMSA has supported the Registry Trust campaign to get the claimant identified with CCJs recorded at RTL and with the credit reference agencies to determine the primary parties registering CCJs and enforcing them. Russell and his team at the CIVEA has posted this week on collection by CIVEA members. Collection of council tax will be part of my dialogue with UK Finance on Monday as we conclude our respective SDRP consultation responses to HM Treasury.

Key statistics featured from April 2022:

  • Each year CIVEA’s members receive around 2.8m cases from local authorities, courts and tribunals
  • Before 2020, more than £550m was collected annually at no cost to the public purse
  • The net collection rate from CIVEA members across all forms of unpaid taxes or fines is around 70%
  • An average of 65% of unpaid council tax is recovered, which would otherwise be lost to the public purse
  • In almost 50% of cases, unpaid taxes and fines are successfully recovered without the need for a doorstep visit, over half of overdue debt cases are resolved through affordable repayment plans
  • Councils have had the case for at least 3 months before it is passed for enforcement, and often the time period is much longer
  • Around 40% of overdue Council Tax debt is collected at the Compliance Stage
  • The average enforcement fee added to a council tax debt is £77
  • Goods are only seized in 0.1% of cases
  • Only 2.5% of fees and debt from council tax cases that are paid in full are collected at the sale stage • The average enforcement fee added to a council tax debt is £77



Trustfolio Debt-Tech Podcast

Look out for the third edition featuring Steve Coppard and interviewers Lee Usher and Peter Wallwork. My moment in the limelight is coming at the end of August in the fourth edition.  

Utility Week

Utility Week Consumer Vulnerability & Debt Conference 2022 is 13 September 2022 and several on the circulation are attending. Some very relevant speakers and attendees. I am speaking with Helen Smith ( again on Monday. The CSA event is on 15 September in Manchester.   

Link: which will take place ‘in person’ in Birmingham.

Who attends?

Utility company directors, heads and managers responsible for:

  • Vulnerable customers 
  • Consumer debt / debt recovery 
  • Billing and collections 
  • Customer service / relationship management 
  • Customer engagement / experience 
  • Stakeholder engagement and partnerships  
  • Corporate communications and external affairs 
  • Credit control, support and strategy 
  • Risk management 
  • Business performance 
  • Regulation and policy 
  • Commercial 
  • Net zero and sustainability  

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