UK Finance has published its first economic insight of 2023.
Caroline Siarkiewicz, CEO at MaPS, was on Good Morning Britain this week around the cost-of-living crisis and the support available.
On 12 January, MaPS issued a press release stating that over 12m people are now borrowing money for food or essential bills and half of them are doing so for the first time in their lives. The survey of 2,180 UK adults shows that 23% have relied on credit or money from family and friends to buy food in the last 3 months. 23% have done so for gas and electricity. Of serious concern is around those that have never had to do this before, which account for 43% with regard to food and 53% with regard to utilities.
Similar numbers said they’re relying on borrowing to meet the cost of their rent or mortgage (17%, 52% for the first time), healthcare costs like prescriptions and dental treatment (17%, 51%) and paying off other forms of credit (21%, 41%).
“Relying on credit or the generosity of family and friends to put food on the table, heat your home and keep a roof over your head can be a constant source of stress. For millions of UK households, it’s also a daily reality.
“The MoneyHelper Cost of Living Campaign aims to reach everyone who’s worrying about money, so we can show them that free, independent help is available whenever they need it.”
Topically, Manu at InBest was interviewed by Chris Warburton around income optimisation. Manu is working with Fair4All Finance and The Behavioural Insights Team to assist and guide customers to complete the benefits questionnaire and find out the benefits available to them. They are also working with Passion4Social CIC to make sure the benefits calculators follow the best practices on accessibility design.
I am pleased to confirm that DEMSA has been accepted as part of the Fairness Group. I received notification yesterday from the Head of Debt Policy at Cabinet Office. This application has taken a little time to get approved.
The first sub-group meetings are in March 2023 and I hope to provide updates in the near future.
https://www.gov.uk/guidance/government-debt-management-function-gdmf – includes link to the vulnerability toolkit
On a related topic, Steve Coppard has provided the latest 2023 insights piece from Arum and Just. With regard to the upcoming VRS event around local authorities, this caught my eye:
“At some point during the first half of 2023, I expect the Housing, Communities & Local Government inquiry into council tax collection to report back (it began accepting written evidence over a year ago and met during June 2022). While there may be differing views on the direction, the general consensus of the IRRV, CIVEA, the ECB and the advice sector, all of whom answered questions during the meeting, was that the council tax regulations need revisiting.”
SIP 3 (IVA) updates from 1 March 2023
I published a LinkedIn post and bulletin on 10 January 2023 around the Upcoming changes to SIP 3.1 (IVA). I have had some useful feedback, notably around vulnerability and some of Colin Trend’s experience around where many clues were overlooked (e.g. payment of PIP) in the SOP 3 process and IVA proposals. He highlighted scripted statements used by the same IP that said that vulnerability was discussed, but the ‘client’ didn’t have any. Repeated usage suggests that this is systemic. There now needs to be a focus on providing tailored information and advice relevant to the debtor’s particular circumstances rather than relying on generic explanations and standardised texts, which is particularly relevant around consumers with characteristics of vulnerability.
Following consultations with the profession and other stakeholders, including The Insolvency Service, HMRC and major creditor representatives, a revised version of SIP 3.1 (IVA), has now been approved by the JIC and the RPBs for implementation with effect from 1 March 2023.
R3 has now updated their website. My quote has been covered by Credit-Connect.
Chris Warburton is chairing the next Online Collections Technology Think Tank on 23 February 2023 and we hope to cover innovations and developments in the debt advice sector, including key collaborations since the last event in November 2022 that DEMSA attended.
Credit Unions and Community Banking event sponsored by IE Hub on 7/2/2023 – ‘Handling Increased Arrears’
I am currently strongly promoting this event to the debt advice sector where recent Credit Union events run by trade bodies like ABCUL and discussions with Cath and Trish at IMLT (Stop Loan Sharks England) have highlighted the need for more collaboration around handling increased arrears and having effective strategies for customers where holistic debt advice may be required or alternative strategies for those with deficit budgets. The main sponsor is IE Hub, supported by Fair4All Finance, InBest, Stop Loan Sharks England and the Vulnerability Registration Service (VRS). Chris Warburton is chairing and will have interviewed a number of industry participants in advance of the event and summarised the survey findings.
We had good attendance from the debt advice sector for the last event.
We are currently updating survey results from September 2022 around ‘Handling Increased Arrears’. Whilst arrears levels have remained largely stable, January and February, post-Christmas holidays, are normally a time when consumers are stretched. This period is likely to be especially important this year, as an indicator for the outlook in 2023, not to mention the processing demands of higher volumes.
PayPlan and Plain Number collaboration
PayPlan continues to act on its commitment to improving its services for customers with low numeracy levels after a second wave of staff became Plain Numbers practitioners. Ben Perkins, Head of Partnerships at Plain Number, posted the news on LinkedIn. This builds on the increasing focus on building competency that is relevant to the deployment of the Consumer Duty, as reflected by new practitioner, Hannah Shipman:
“The training sessions provided by Plain Numbers were great – Ben, James and Mike skillfully guided us through the process and were there to support us not just throughout our training but also beyond as we move into our new roles as practitioners. We know this is going to come in really handy for the future, especially in light of the new Consumer Duty coming into place in July (2023).”
Plain Numbers have worked with The Bank of England, and the trials showed that their approach doubled the number of people who understood the information.
Sam Nurse – Scam Alert
My thanks to Sam for this scam alert. As previously reported, fraudsters are impersonating agents on the Certificated Bailiff Register demanding money be paid to them for debts purportedly owed. She has provided some tips for advisers to relay to worried customers.
Open Banking – the next phase
In December 2022, Sarah Cardell was named CEO of the Competition and Markets Authority (CMA). Open Banking Limited (OBL) has also announced that Charlotte Crosswell OBE, Chair and Trustee of the Open Banking Implementation Entity (OBIE), will step down from her role on 31 January 2023 when her contract expires.
The CMA has determined that the 6 largest banks Barclays, HSBC, Lloyds, Nationwide, NatWest and Santander have implemented the requirements of the Open Banking roadmap. Of the remaining CMA9 banks, the OBIE will continue its work to ensure that the 3 remaining major banks (Allied Irish Bank, Bank of Ireland and Danske) that have not implemented all of the requirements of the Open Banking Roadmap do so as soon as feasible. A group of the UK’s Fintechs (including Monzo, Plum, Wise and MoneyHub) have signed a joint letter to Sheldon Mills at the FCA calling for greater clarity on how open banking will be regulated from 2023 onwards.
In October 2022, the EY UK Payments Consulting team published a blog referenced by UK Finance in January 2023 around the 7 forces reshaping the payments industry. Some on the distribution having been heavily involved in this, like Ecospend. BNPL later features in this at a time Experian has advised that somewhere between 6-8m BNPL records be added to their database in January 2023. Experian will be sharing this data with TransUnion.
Open banking will be a real game changer as many more players will embrace “pay by bank,” as well as new payment methods like variable recurring payments (VRPs). Further to my blog around the ‘Consumer Value eXchange’ (nearly 1,000 impressions) in late December 2022, the UK Finance piece says that open banking has allowed consumers to be firmly in control of their data, identity, and payments. The practice of securely sharing financial data by connecting merchants and customers directly has created compelling “open payments” or “pay by bank” options. While the global landscape is fragmented, there is a general opening up of access and infrastructure to support customer choice.
As previously reported, the Joint Regulatory Oversight Committee (JROC), set up in March 2022 and comprising HM Treasury, the CMA, Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR), will take Open Banking forward and will be setting out its recommendations on the design of the future Open Banking entity in Q1 2023.
I also picked up on a survey by PCI/Pal, where they asked more than 2,200 U.S. and U.K. consumers why they use various payment methods, which ones they trust the most, and why. They reflect on the 3 most influential factors impacting consumers when choosing a payment method.
- Security is the most important factor – 89% of UK respondents
- Fast, easy checkout – 69% of UK respondents
- Flexibility – including ability to pay over time (e.g. BNPL) – 50% of UK respondents
CP23/1 – Support for UK customers in financial difficulty
This has relevance to the debt advice sector. The FCA is consulting on replacing the insurance aspects of their previous guidance for insurance and premium finance for customers in financial difficulty due to coronavirus (Covid-19), with insurance guidance that applies to all customers in financial difficulty.
The FCA will consider the premium finance aspects of their Covid guidance, as part of a separate consultation on the future of Covid Tailored Support Guidance (TSG) for mortgages, consumer credit and overdrafts.
Debt adviser and FinTech considerations
The CP set expectations of insurers to help deliver good outcomes to customers in financial difficulty, help those customers maintain an appropriate level of insurance they can afford and reduce the risk of the customer losing appropriate insurance cover that is important to them.
Insurers may often be the last to find out that someone is in financial difficulty and at risk of making poor decisions around their finances, which may include dropping or reducing cover.
The CP closes on 11 March 2023. DEMSA will respond as a trade body.
Consumer Duty and Vulnerability Training
VRS is running another ‘live’ Consumer Duty training session on 30 January 2023 if anyone is interested. Please contact Kirstie or Heidi if interested. I have copied them on this email.
Chris is still taking online bookings for the recorded Consumer Duty training sessions. I have copied Chris on the email. For those that have already had the face-to-face training from me or via the VRS webinars in October then Chris will provide a token to access the training repository free-of-charge.
I am currently recording the refresher training around TCF mapping to the Consumer Duty and the requirements of PRIN2A. This will be available at a senior manager and frontline staff level, priced accordingly for volume usage with CPD. This will align with refresher Conduct Rule training under SM&CR for frontline staff. This needs to align with the April and July deadlines depending on your business model and the presence of distributors in your supply chain.
I was also interested in a post Jo Howcroft (BSI) the FCA scrutiny on supply chains. Along with physical supply chains, digital supply chains are becoming increasingly under scrutiny as firms become more aware of the data they collect and use. This aligns strongly with my thoughts on the ‘Consumer Value eXchange’ last week, where trust is a critical factor in digital transformation and engagement by consumers. Digital trust is the confidence users have in the ability of people, technology and processes to create a secure digital world. Digital trust is given to companies who have shown their users they can provide safety, privacy, security, reliability, and data ethics with their online programs or devices.
Ofgem – Priority Services Register (PSR) explained
Anti-Money Laundering (AML) – OPBAS sourcebook
The Office for Professional Body AML Supervision (OPBAS), part of the FCA, has published its new sourcebook for 2023, providing information for PBSs on how to comply effectively with responsibilities under the 2017 Money Laundering Regulations.
This will be relevant to insolvency practitioners and their RPBs. The IPA has confirmed that the document is helpful to IPs to better understand what AML PBSs are tasked with doing and what they should be expecting from the IPA in terms of compliance work.
ICO update – Direct marketing and data brokers
As the scrutiny around how firms acquire and maintain customers intensifies, the ICO discusses appropriate due diligence to ensure that your firm is certain that the personal data being offered complies with data protection law and the Privacy and Electronic Communications Regulations (PECR).
The ICO reminds firms that if they use, or intend to use, the marketing services of data brokers then they must remember that they are responsible for ensuring that processing of personal data is compliant with data protection law.
Data broking for direct marketing purposes involves collecting data about individuals from a variety of sources, then combining it and selling or renting it to other organisations. The services provided by data brokers for direct marketing purposes include:
- selling lists of contact details
- selling copies of the open electoral register
- profiling and data enrichment (e.g. adding data to the profile you already hold of people)
- data matching (e.g. providing phone numbers for people who you only hold address details for)
- data cleansing and tracing (e.g. removing deceased records from your database and tracking down new contact details for people)
- screening services (e.g. screening the telephone numbers you hold against the Telephone Preference Service)
- audience segmenting or other profiling (e.g. identifying target sub-groups within an audience for tailored messaging)
Whilst the data brokers have responsibility for ensuring their processing of personal data is compliant with the law, those who are their clients and use their data broking services also have responsibilities under the GDPR and DPA 2018.
We have obviously plugged the Credit Union and Community Banking event above on 7/2/2023.
VRS – Local Authority event on 13/2/2023
On the theme of data sharing amongst local authorities, this important event will feature several case studies, including Kent.
There has been good pick-up by CCR on the VRS ‘Vulnerable Customer Exclusion Report 2022’ report.
The Vulnerable Customer Exclusion Report 2022 can be downloaded at the link above. In terms of 2023, Helen has made the following statement:
“This report is an urgent call for action to address the vulnerability emergency that is sweeping the UK. There are clear steps organisations can easily take right now to alleviate the difficulties for so many of their customers. The Vulnerability Registration Service is an extremely powerful starting point for all service providers and the only database that flags known vulnerabilities. By not being proactive in understanding who among their customers is vulnerable right now, they are effectively excluding them from getting the support they need and actively causing them greater harm.”
Online Collections Technology Think Tank 4.1 – Thursday 23/2/2023
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