DEMSA update: “Dear CEO” / Case studies / Sludge / Insolvency stats / Financial promotions / Consumer Duty Training / Events

As the Credit Summit 2023 is moved to 27 April 2023, one of the smaller unions involved in the rail dispute has voted to accept a settlement offer with train companies.

Following the MaPS national debt advice award to Gregory Pennington, they are now showing a new website on the MoneyHelper website.


Link: – Money Wellness is a trading style of Gregory Pennington Limited


Important update on Experian appeal against ICO action around processing of personal data

A Tribunal found, in support of the ICO, that Experian had not processed the personal data of over 5m individuals transparently, fairly or lawfully because it failed to notify them that it was processing their data for direct marketing purposes. However, it rejected the ICO’s view that Experian’s privacy notice was not transparent, that using credit reference data for direct marketing purposes was unfair, or that Experian did not properly assess its lawful basis.


Fraudulent and misleading advertising

I had a long catch-up with Dave Holland at the IPA this week and fraudulent advertising remains a priority, with regular evidence of introducers impersonating legitimate providers. Some of the StepChange examples are unbelievable. What is evident on some of the evidence is the very poor language used or coercive approaches to obtaining personal data. We have some very smart FinTechs on the circulation that should be able to help legitimate providers give confidence to vulnerable customers around digital journeys.

The IPA has recently seen an increase in fraudulent websites posing as debt advice providers in Google search results (featuring as ads). Equally, they have also seen clones of legitimate insolvency firms’ websites and false websites created for insolvency firms which have no web presence in order to carry out illicit activity.

How to protect yourself and your firm:

  • Ensure that any online records with your information match the online Insolvency Service IP register
  • Perform regular online checks and reviews of Companies House numbers and addresses to make sure they aren’t being used on any websites without permission
  • Have a clear ‘Terms and Conditions’ page on your website, which clearly explains what you own and what your policy is about anyone copying the content (this will assist in being able to take action in the future)
  • Ensure that your website complies as far as possible with the requirements of the Provisions of Services Regulations. This guidance defines that the regulations still apply post Brexit, and members should ensure they make all the relevant information available. Complying with the regulations is a requirement and it gives credibility to a website. It also enables frauds to be quickly spotted if the information is missing or does not match other reference points available from web searches.

I have copied Dave on this email and referenced the IPA statement on unregulated debt advice from January 2023.

We also discussed the journey from regulated debt advice into the new SIP 3 requirements from March 2023 and the response to the Debt Packager CP23/5, which is due next week.



IncomeMax has won the Salesforce “Impact story of the Quarter” award

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I am really pleased for Lee Healey, Dan Woodhead, Sam Manning and others involved in this successful collaboration with a key Salesforce partner.

Amplified Global – FCA Case study – Innovation can benefit us all

I am really pleased to see Amplified Global™ featured by the FCA. DEMSA attended the launch of the Mixed Messages report at the FCA offices in November 2022, which was a collaboration with StepChange Debt Charity. Sheldon Mills keynoted and Faith Reynolds chaired the sessions with Minesh Patel and Peter Tutton speaking. Minesh also made a great presentation at the Credit Strategy collections & vulnerability event later in November.  

Communicating with your target audience is a key factor in the FCA “Dear CEO” messaging at the moment, which includes intelligibility. Evidencing this can be demanding. Amplified Global has worked with all 3 of the FCA main innovation services. Fair4All Finance was included in 2022. The Open Banking Implementation Entity went through in Cohort 5. In Cohort 1 (2016), Citizens Advice went in with a semi-automated advice tool that allows debt advisers and clients to compare the key features of solutions to their debt problem.

What are firms required to do?

“A trader must ensure that a written term of a consumer contract, or a consumer notice in writing, is transparent. A consumer notice is transparent for the purposes of subsection (1) if it is expressed in plain and intelligible language and it is legible.”

Consumer Rights Act 2015 –

Some of the comments in the debt advice sector “Dear CEO” Letter are interesting relative to automated models. Innovation pathways features Angel Advance and Gregory Pennington around automated models.  





Income optimisation – MaPS / InBest collaboration

graphical user interface, text, application

DEMSA has actively encouraged debt advice firms to assess entitlements to benefits and social tariffs as part of debt advice sessions, whether new clients or on review. Manu Peleteiro has just announced the InBest collaboration with the  MaPS through MoneyHelper.

The FCA “Dear CEO” letter to debt advice providers highlights the importance of this. Income maximisation (where the firm identifies potential additional income, such as unclaimed benefits) and budgeting advice are particularly important in this context. These services may also help customers pursue their financial objectives, as outlined in the Duty.

They have also reinforced the use of the Debt Respite Scheme (see the “Helping customers in complex or vulnerable circumstances” section of the FCA letter for more information).


Congratulations to United Kash on CSA membership

DEMSA associate, United Kash (debt buyer), has just had confirmation of its CSA membership. We have a number of associate members that are full CSA members, highlighting the synergies now required and highlighted in the “Dear CEO” letters. This is most evident around affordability and vulnerability assessments, with increased focus on income optimisation. Trish Cassidy makes some great comments around identifying loan shark activity in today’s bulletin. We are seeing increasing collaboration around training & competency.

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Moriarty Law and IE Hub collaboration

The FCA “Dear CEO” letters to DCAs, debt buyers and BPO providers with debt administration permissions is going to put more focus on best practices in affordability and vulnerability assessments, including pro-active approaches to income optimisation.

I picked up on a recent post by Moriarty Law on their collaboration with IE Hub, where data sharing is going to be more and more topical, as evidenced on the Credit-Connect Think Tank this week.

Andrea Varga article on vulnerability identification

Interesting article from Andrea Varga, Head of Innovation at Aryza, referencing the Vulnerability Registration Service (VRS)  and their survey data in the week that the FCA has issued “Dear CEO” letters to the debt advice sector and firms involved in debt recovery. Aryza offer many platforms (e.g. Advize for debt advice) at different stages of the customer journey. The VRS can be applicable at each stage.

Andrea believes that by providing ongoing visibility of affordability and vulnerability, rather than a perspective at one point in time, technology can ensure that businesses working across the financial services, debt recovery and utilities sectors are automatically alerted when a vulnerability occurs. Similarly, if a person’s situation suddenly changes, they can take the most appropriate course of action. This has become increasingly necessary in the insurance sector following CP23/1 (Insurance customers in financial difficulty). I have attached my Blog on this topic that discusses the role of services like VRS (vulnerability data sharing) and IE Hub (affordability data sharing). It also discusses the potential value of BSI ISO22458 (consumer vulnerability and inclusive design), recently completed by PayPlan.

Solutions such as Aryza Recover are intended to provide a single user-friendly dashboard, pulling together key metrics such as a monthly I & E, as well as identifying additional benefits that a person might be entitled to. This information can also be accessed by lenders and credit providers, preventing consumers having to trawl through endless documents when applying for finance or entering early-stage arrears.

The “Dear CEO” letter to the Debt Purchasing, Debt Collecting and Debt Administration Services (“DPCA”) portfolio has highlighted the rise in deferred payment credit (i.e. BNPL). Like loan shark debts, the FCA believe this may present operational challenges where the number of accounts agents need to service continues to rise. This may influence which debts go down a digital path versus a more process with more ‘friction’ and interrogation involved.

They expect firms to anticipate the operational requirements they need to make in order to manage any increased demand and to note the Government’s recently announced intention to bring currently exempt BNPL products into regulation.

As with ‘sludge’ practices, it is important that there is consistency in the investment throughout the product lifecycle with evidence that back-end systems & controls have equivalent focus to front-end onboarding platforms.   

Helen Lord has set up a LinkedIn forum entitled Supporting the Vulnerable. I have posted on this. I am encouraging readers to follow and contribute. We are looking for examples of collaboration and best practice, which has included Manu’s recent collaboration with MoneyHelper. I have also worked with FourNet on a ‘Supporting vulnerable customers’ paper aligned to the Consumer Duty around how technical innovation can support implementation programmes. Many of these concepts are developed at the VRS Consumer Duty training.     



The future role of Breathing Space

In 2022, there were 70,546 registered Breathing Spaces, comprised of 69,334 Standard and 1,212 Mental Health breathing space registrations. Average monthly numbers were 14% higher in 2022 than in 2021 (launch May 2021). January 2023 figures weren’t available at the time of writing.

The FCA “Dear CEO” letter (see below) to debt advice providers from 21 February 2023 references the Debt Respite Scheme (“Breathing Space”). The FCA has confirmed that advisers should consider whether this tool may help your customers achieve their financial objectives. They are still used inconsistently across the sector. This will undoubtedly form part of market reviews that have also been announced for smaller higher-risk (permissions) firms.


“Dear CEO” letters

I have posted on LinkedIn that the FCA has published the “Dear CEO” letter for the debt advice sector. They have also published other letters, including for debt purchasers, debt collectors and debt administrators.

As expected, the FCA has published additional “Dear CEO” letters to debt advice providers around the Consumer Duty implementation. Senior managers are reminded of their responsibilities and priorities:

“We expect the Consumer Duty to be a top priority for you personally. We want good outcomes for customers to be at the heart of firms’ strategies and business objectives, and leaders have a key role to play here. Firms’ Boards and senior management should embed the interests of customers into the culture and purpose of the firm.”

Examples about how the Duty applies to firms in the Debt Advice Portfolio are in Annex 1 of the letter. Fair value assessments are referenced.

Click on ‘Portfolio and sector communications’.

Dealing with loan shark debts for customers in debt solutions – Trish Cassidy, IMLT

The FCA has flagged in its “Dear CEO” letter to debt advice providers the need to be vigilant for loan shark debts. DEMSA has been a supporter of Stop Loan Sharks England where Trish and Cath have supported recent events with Credit Unions and Community Lenders. The England Illegal Money Lending Team (IMLT) is a specialist Trading Standards team that investigates and prosecutes loan sharks. Since its launch in 2004, the IMLT has prosecuted more than 400 people for illegal money lending and crimes such as blackmail, kidnapping, rape and assault. It has also written off £85 million in illegal debt and helped more than 30,000 people escape the clutches of loan sharks. The IMLT works closely with partner agencies to raise awareness of the dangers of loan sharks in communities and help residents access safe financial services, such as credit unions and debt advice.

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FCA “Dear CEO” letter reference: “If a customer indicates they have loans from friends and family, for example, we expect firms to probe this sensitively and appropriately”

Trish has commented:

“We welcome the reference to illegal lending in the FCA Dear CEO letter on Consumer Duty. Where debt advice clients are owing money to a loan shark, including those masked as a ‘friend’ debt, it is essential that the debt is managed correctly and that the borrower seeks our specialist support as soon as possible.

“IMLT offer free bespoke training to all debt advisors, focusing on practical ways of spotting victims, handling the conversation and effective signposting.

“We can also assist in reviewing your online journey, communications and policies to ensure appropriate handling of the debt. It is worth noting that if a loan shark debt is not properly accounted for, the debt solution is likely to fail and incorrect advice recommended.

“We are due to launch our new debt advice training in the coming weeks, over social media. So I will be sharing those on LinkedIn very shortly.”

Debt advice and debt solution providers need to take heed of this. Sheldon Mills has spoken this week and reflected on some of the challenges ahead.

Speech quotes:

“We will be surveying around 600 smaller firms next to check how prepared they feel with their implementation plans.”

“We will always tackle the biggest risk to consumer harm first.”


The “Dear CEO” letter to the Debt Purchasing, Debt Collecting and Debt Administration Services (“DPCA”) portfolio has highlighted the rise in deferred payment credit (i.e. BNPL). Like loan shark debts, the FCA believe this may present operational challenges where the number of accounts agents need to service continues to rise. This may influence which debts go down a digital path versus a more process with more ‘friction’ and interrogation involved.

They expect firms to anticipate the operational requirements they need to make in order to manage any increased demand and to note the Government’s recently announced intention to bring currently exempt BNPL products into regulation.

Operational and Financial Resilience

As we approach the deadline for the FCA response to CP23/5 (Debt Packagers), the FCA has issued another “Dear CEO” letter to the debt advice portfolio. This scratches the surface of the thorny topic of sector funding and the cost recovery of debt advice if you are not MaPS funded. CP23/5 focuses heavily on Principle 8 – on conflicts of interest. The SDRP consultation in 2022 brought this to the fore again.

In the latest “Dear CEO” letter, the FCA has highlighted firms reliant on income through DMPs and/or ‘Fair Share’ funding.

These firms need to anticipate and plan for how they would maintain financial and operational resilience in circumstances where sources of income for the firm are constrained due to the economic pressures. They have focused on robust annual review processes and income optimisation, which are established practices. Open banking is referenced as a complementary capability to support these processes at the time of onboarding and review. Re-assessing customer objectives on review is part of the suitability letter process. Bizarre that this happens on a DMP, but not on other other debt solutions.

There is no doubt that granular MI and data analytics are required on cost to serve that link into your Product Assurance Framework.


Sludge practices – guest blog by Ian Phillips, Risk and Compliance Director at StepChange Debt Charity

I am grateful to Ian for allowing us to share his Blog and summary of a recent FCA Podcast. Many will be interested in real examples of sludge practices and one of my pet frustrations in ‘call wait’ times for non-sales activity (i.e. what used to be known pre-pandemic as customer service).

FCA quote

“What we expect is firms to review their customer journeys and look out for frictions along the way, considering the impact on customers. So, asking what is this friction point doing? Is it there to protect customers from harm and nudge them to make the right decisions or is it just

making customers’ lives more difficult by getting them to jump through hoops to do something that’s likely to benefit them. It’s the outcome here that really matters, so again firms monitoring will be important in helping them understand how customers behave and respond to different journeys and whether they’re driving the right outcomes.”


Just when you thought you knew what sludge was, it becomes the unexpected Regulatory buzzword of the year.

Following on from the FCA’s previous podcasts on the Consumer Duty Price & Value, Products & Services and Consumer Understanding outcomes, is a further edition focused on Consumer Support. You’ll hear that sludge is friction which doesn’t act as a consumer safeguard. Quite the opposite, in fact.

Sludge, intentionally or otherwise, is the friction which puts a consumer off doing something, such as complaining, or changing a product.

This latest outcome is about ensuring the level of support provided meets the needs of the consumers throughout their relationship with the firm, including ensuring that:

  • Consumers are provided with the support they need when they need it
  • The support provided is consistent, and appropriate
  • Firms have appropriate communication channels to deal effectively with non-standard issues
  • Firms clearly communicate support available up front to enable informed decision making
  • Flexible approaches are employed when a consumer has a characteristic of vulnerability. This can range from spending more time with a consumer to ensure understanding, to the provision of documents in a variety of formats
  • Customer journeys are reviewed for both sludge and appropriate positive friction.

There’s some interesting, practical discussion of things like call waiting times, which can act as sludge if they mean a consumer is more likely to abandon the call before they fulfil their objective. The FCA do not prescribe what reasonable call waiting times are, as what is reasonable depends on the circumstances. However, they express the view that the wait time for ‘post sale’ calls should not be longer than those where a ‘sale’ can be made.

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Again, monitoring is key for this outcome, with several MI options easily available such as: customer behaviour, call wait time, abandon rates, complaints, and customer satisfaction results.

The concept of test, learn, and improve is mentioned several times as an important part of the Duty, and it is worth considering where else this can be applied/used.


Insolvency statistics – January 2023

I didn’t cover these earlier in the month and the December 2022 and January 2023 dip in IVAs may be relevant to the Debt Packager consultation response (CP23/5) that is due next week. They also didn’t cover the full month of January 2023. There were, on average, 6,328 IVAs registered per month in the three-month period ending January 2023, which is 1% higher than the three-month period ending January 2022, and 6% higher than the three-month period ending January 2020.

There were 1,741 DROs in January 2023, which was 7% lower than January 2022 and 21% lower than the pre-pandemic comparison month (January 2020). By contrast, 612 bankruptcies were registered, which was 5% higher than in January 2022, but 60% lower than January 2020 (debtor applications were 60% lower and creditor petitions were 61% lower).

In January 2023 there were 123 individual insolvencies in Northern Ireland, 26% higher than in January 2022, but 51% lower than January 2020. This consisted of 103 IVAs, 15 DROs and five bankruptcies.

I will report on Scotland separately when stats are available.


Consumer Duty Training

The next round of Consumer Duty training commences on Monday 27 February 2023. Kirstie and Heidi are organising and are copied if you are interested in any of the dates below (booking link below). I am looking forward to having Peter Wordsworth, Head of Insolvency Solutions at StepChange, as a delegate on Monday. The journey from debt advice to SIP3 is an interesting one with new requirements coming in March before the next Duty milestone on 30 April. Distribution chains are now a priority.

I feature the recent collaboration announced on LinkedIn between the Digital DRA and VRS, which is timely given some of the FCA comments in their “Dear CEO” letter to DCAs, debt buyers and BPO firms (undertaking debt administration). I have tried to capture some to the challenges in my recent paper for FourNet entitled “Striking the right balance” around digital-first and digital engagement. Chris Warburton discussed this at the Credit-Connect Think Tank this week, which involved providers like Ophelos and Ceverine.


Research by Chris Warburton and I found that some aspects of digital engagement are commonplace in the recoveries sector, including payment portals, 2-way SMS, email, webchat, WhatApp and ‘live chat’. Full blown digital journeys are less prevalent and self-serve platforms vary in terms of content and user functionality. We are exploring ChatBots further as we look a finding the right balance in a tough economy.  

Interesting Blog by Nicola Wee from Aveni entitled “Human in the loop 101: what is it and why is it so important?”. Nicola elaborates on why regulated firms have been turning to Natural Language Processing (NLP) solutions to extract valuable insights from vast amounts of unstructured data. We have many interested parties on the circulation and we will feature other case studies. The key message is that the most advanced algorithms can’t match the intuition and creativity of the human brain. That’s where “Human-in-the-loop” (HITL) is meant to come in. If you are wondering (like me) what HITL is and why it’s so crucial to NLP solution efficacy then click on the link below.  




Just a reminder that in April 2023, the NCSC and its Cyber Essentials delivery partner IASME will update the technical requirements for Cyber Essentials. This update is part of a regular review of the scheme’s technical controls, ensuring that it continues to help UK organisations guard against the most common cyber threats.


Online Collections Technology Think Tank 4.1 – Thursday 23/2/2023

I spoke in Session 4 of the very well attended Credit-Connect event on 23 February 2023 chaired by Chris Warburton. I was joined by Jamie Buckley from StepChange and Ian Parry from Utility Collections. We have to write up the answers to audience questions next week.  

Debt Awareness Week – 20-26 March 2023

“Early intervention to support customers struggling with debt” – StepChange event on 23 March 2023. This is a round table discussion, exploring how early intervention is key in supporting customers through the cost-of-living crisis and how StepChange and NewDay are working together to improve customer outcomes and increase efficiency. Featuring Vanessa Northam and Zoe Barlow.


Credit Strategy Credit Summit 2023 – 27/4/2023

This will move because of the rail strikes. The good news is that I can still speak about Collections Strategies. Venue is the QEII Centre. Roma Pearson is speaking from the FCA. I am on with Sam Challenger, Head of Collections & Customer Experience at Billing Finance.


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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