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

General update

The FCA has set out ways that mortgage firms can help customers worried about or already struggling with their mortgage payments as a result of the cost-of-living squeeze. This is relevant to the DEMSA deficit budget response (attached) to MaPS where the reduction in mortgage repayments may enable a deficit budget to be converted into a surplus budget with careful thought.

The FCA is consulting on draft guidance explaining a range of options firms have to support customers impacted by the cost-of-living crisis, including varying a contract for forbearance purposes. The deadline is 21 December 2022.


“Firms may vary a contract without assessing affordability  (as set out in MCOB 11.6.2R) when doing so solely for the purposes of forbearance where the customer has a payment shortfall, or in order to prevent one occurring (MCOB 11.6.3R(3)). This could include a contract variation which switches a repayment mortgage onto an interest-only basis for all or part of its term, or extends the mortgage term into (or further into) retirement.”

UK Finance has posted a Blog around “Don’t let money worries dampen your festive spirit”. They state that mortgage lenders are ready to help any customers concerned about making their mortgage payments, whether worried about current bills or coming to the end of fixed-rate mortgage deals and expecting higher costs than before. Meanwhile, squeezed household finances and the high levels of inflation have resulted in only 24% of people surveyed by YouGov for StepChange saying they will comfortably be able to afford Christmas this year, compared with 45% last year. 8% people will rely on credit this Christmas and of those who intend to borrow on credit, 81% said their reason for using credit was due to a higher cost of living and 41% said they were currently struggling with their household finances. Lowell has found that one in four consumers are relying on credit cards to fund Christmas this year.

If someone is in receipt of, or qualify for, Universal Credit (or other income benefits), they can apply for a Support for Mortgage Interest (SMI) loan. This means that a lender can switch their mortgage to interest-only and SMI will cover the interest payment. In the Autumn Statement, the government confirmed that the wait time for eligibility will be reduced from 39 weeks to 13 weeks. The zero earnings rule will also be removed, meaning that those with some income will not be penalised.   



Debt collector scam alerts

According to this BBC story, people in debt have been swamped with demands via letter, phone and text, leaving them “unable to tell between real bills and scams”. The quality of arrears communications will be under scrutiny as we approach the next April 2023 milestone around Consumer Duty implementation. Building trust is a key factor and encouraging engagement.

The Money and Mental Health Policy Institute has criticised a lack of clear legal rules in the UK limiting how often people could be contacted about overdue bills. This may draw comparison with some of the changes in the US from November 2021 that we have previously covered in DEMSA bulletins. US and UK practices do vary quite markedly in many areas. The Consumer Financial Protection Bureau (CFPB) implemented the revisions to the Fair Debt Collection Practices Act (FDCPA) known as ‘Debt Collection Practices (Regulation F)’. The overall aim of Regulation F was to outline prohibitions on harassment or abuse, false or misleading representations, and unfair practices.

The article makes reference to wider use of breathing space. Pro-actively using budgeting tools is one of the more obvious first steps, but this may require money advice support either through the tool or with an agent. Wider awareness is critical, as is wider awareness of debt advice, which remains disappointingly low despite references on creditor arrears and default correspondence. Consumers still struggle to differentiate between statutory correspondence and actual collection activity, which is part of the communications challenge highlighted in the Mixed Messages report by Amplified Global and StepChange.

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Santander AML failings

The FCA has fined Santander UK Plc (Santander) £107,793,300 after it found serious and persistent gaps in its anti-money laundering (AML) controls, affecting its Business Banking customers. Between 31 December 2012 and 18 October 2017, Santander failed to properly oversee and manage its AML systems, which significantly impacted the account oversight of more than 560,000 business customers. 


Craig Simmons has already been active with Clear Consulting Services and posting on LinkedIn. Peter Wallwork and I have joined in the SDRP debate.

Impact of poor service by Water companies

With the cold weather upon us this is fairly timely. The Consumer Council for Water (CCW) has urged that water companies must not add to the worries of households through poor service. CCW has responded to Ofwat’s annual water company performance report which sets out a number of areas where water companies are falling short of the standards customers expect. It highlights a fall in customer satisfaction, poor performance on pollution and a failure by the vast majority of companies to meet targets to reduce household consumption of water.

In October 2022, a joint letter (attached) to water and wastewater company CEOs, David Black, Chief Executive of Ofwat and Emma Clancy, Chief Executive of CCW, asked for more support to be given to customers.

CCW’s review of water affordability has played a key role over the past year, setting out a path for improving support for customers. This included CCW’s recommendation of the introduction of a new water affordability scheme that is now being considered by UK and

Welsh Government. CCW’s pilot schemes have also facilitated greater collaboration, with findings and good practice being shared across the sector.


Impact of financial hardship on health and wellbeing

This article is being promoted by MaPS.


Grand Union Housing Group collaboration with FourNet in the Housing Association sector

With over 12,000 properties and 27,000 customers, Grand Union Housing Group was looking for a way to keep improving Customer Experience (CX) without overwhelming their contact centre agents with more work. After CX analysis, FourNet found that 66% of Grand Union Housing Group’s enquiries were through digital channels, so they needed a way of meeting growing customer requirements.

A solution was delivered deploy a personalised chatbot named ‘Sam’, who is able to handle everything from rent balances to repair appointments, leaving agents more time for complex queries.

Link: – case study    

Policy in Practice Autumn Statement Newsletter

I spotted this Policy in Practice post by after their win at the Public Finance awards.


PayLink newsletter

This features their collaboration with Ecospend, where they were named Open Banking category winners at the Credit & Collections Technology awards in November 2022.


FCA Financial Promotions

The FCA has created a new function to help newly-authorised firms adapt to their supervision as they start up and grow, protecting consumers from bad practice. During 2021 to 2022, they ran a pilot with 32 newly-authorised firms. 


This consultation (CP22-27) has been posted this week by the FCA:

The proposals in this CP will affect authorised persons who approve, or intend to approve, financial promotions for unauthorised persons.

I suspect that this will be geared to BNPL where unregulated retailers/merchants advertise BNPL on behalf of a ‘to be’ regulated provider (e.g. Klarna). It is currently targeting high-risk investment advertising.

MaPS Standard Financial Statement – governance meeting on 6/12/2022

There was considerable debate around the proposed figures that will take effect in April 2023. They have been approved under a different methodology than previously, taking account of the state of the economy and rising inflation. For those that are SFS licensed then these figures will be published in due course by MaPS.

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I also circulated the DEMSA response to MaPS around their deficit budget consultation. I have attached the response and I have posted on LinkedIn. I am monitoring for other responses and have reviewed the IMA response (attached) as part of the DEMSA submission. The IMA response is strongly aligned to local community debt advice and with constant references to funding shortfalls, which can detract from focusing on consumer outcomes. There are a number of strong messages around the wellbeing of debt advisers and the wider support network. Sam Manning at Hope Macy has been working with the team at IncomeMax to find the right balance between scaled support services and a very personal service for consumers in problem debt requiring lengthier sessions with more complex scenarios requiring more time. This is a common theme in the IMA response regarding deficit budgets, where large deficits can be readily identified in the initial process, where automation can be readily applied.

The SFS webpage needs a bit of sprucing up from the last news being from May 2019.


Principal/AR Regime (PS22/11) – key date was 8/12/2022

As DEMSA has previously posted, the FCA has published new rules to make principal firms more responsible for their appointed representatives (ARs).Principal firms should have received a mandatory Section 165 (S165) data RFI about their ARs at the end of last week or on Monday.

Principals must provide the following information about ARs and introducer ARs (IARs):

  • the reasons for any appointments
  • the nature of their regulated business
  • whether any unregulated business is conducted and, if so, the nature of this business
  • anticipated revenue
  • the nature of financial arrangements between the principal and their AR(s)
  • complaints information and whether the AR is part of a group

Firms will have until 28 February 2023 to respond to the request. RFI responses will inform the targeted supervisory work across sectors and portfolios. Sections 2.44 and 2.81 of policy statement PS22/11 provide more information. 

The FCA has reminded firms that their rule changes came into force from 8 December 2022. Principals should have read the updated rules and taken the necessary steps to comply. A number of providers of #debtadvice have ARs on the FCA register, including insolvency practitioners. This also applies to DCAs with ARs.

Link: – updated 8/12/2022



Update on debt packager proposals (CP21/30)

I also provided a DEMSA bulletin and post this week on CP21/30 around the Debt Packagers consultation. It is evident that there is a lot of co-ordinated activity going on around financial promotions and the conduct of regulated firms involving ARs/IARs and advertising channels.

The new Principal/AR (PS22/11) is closely linked to the FCA Debt Packager consultation. Small firms with high-risk permissions supervising much larger firms as ARs are likely to be a key area of regulatory focus. PRIN2A is very topical in this respect and we will continue to provide training around this key topic. Please contact @’Chris Warburton’ if you would like to access the online Consumer Duty training covering PRIN2A. It was recorded at the start of December 2022. This forms a component of the new training (L & D) platform.       

The FCA published on 5 December 2022 a holding release around the Debt Packagers consultation CP21/30 from 17/11/2021. There will undoubtedly be coordinated activity around compliant financial promotions as the cost-of-living crisis intensifies. Regulated firms can expect more data requests from the regulator.


Ombudsman News 176

FOS recently hosted a roundtable discussion on motor insurance. Ombudsman Leader and Head of Practice for motor insurance, Rachel Lam, shared insight with insurers and brokers about the cases they’re seeing and their approach to complaint-handling. There are many lessons the consumer credit sector can learn from general insurance sector, where they have been subject to FCA interventions and several “Dear CEO” letters ahead of the Consumer Duty coming into force. With a significant number of intermediaries in the supply chain, the April 2023 milestone is significant.

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Ombudsman Leader, Constance Chinhengo, attended an Association of British Insurers (ABI)’s event to talk about the FCA’s new Consumer Duty and the role of the FOS. Constance shared some of the ways they’re working with the regulator and with stakeholders during the implementation period.

Many consultation responses (including DEMSA’s) made reference to the importance of FOS being aligned with the FCA expectations from PS22/9 and the non-handbook guidance. FOS has reflected that some stakeholders were concerned that outcomes-based regulation may lead to inconsistent interpretation of the new Duty by FCA and FOS. Many of the consumer credit trade bodies (e.g. CCTA) have been very vocal in this respect, especially if it encourages CMC activity post-implementation. Constance has reinforced that FOS won’t apply the Duty retrospectively. They will only apply it to complaints about acts or omissions occurring after the implementation period.

The Wider Implications Framework is a way that members of the regulatory family work with each other and other parties as appropriate on issues that could have a wider impact across the financial services industry. He confirmed that it forms part of the FCA Business Plan priority on ESG and their wider strategy for 2022 to 2025.

Sheldon Mills spoke at the ABI event on diversity & inclusion.






ISO 22458 (consumer vulnerability) update

The energy sector was one of the key focus areas for the new ISO vulnerability kitemark from BSI. Energy, Water and Financial Services are 3 target sectors for the first cohorts of the new standard with strong interest from affiliates on the circulation. The first accredited cohorts are due to be announced in January 2023.

In the article below, Natasha Bambridge explores consumer vulnerability as the cost-of-living crisis worsens. In the article, Natasha stresses the importance in ISO 22458 of frontline staff being trained to understand risk factors, identifying signs of vulnerability that could make individuals susceptible to harm by affecting their ability to interact with essential service providers and regulated firms.  

The gap analysis document available from the BSI website link below may be of interest. Jo, Kiren and Chris Parry are copied on the bulletin.



Events this week

VRS webinar on 13/12/2022

This looks like it will be really well attended. Kirsty has returned from maternity leave. Heidi is running the event. I have copied both above.

Speakers include:

  • Jason McMahon – Mental Health & Suicide Prevention Advocate
  • Rosie Lyon – Domestic & Financial Abuse Advocate
  • Lynn Crawford – Financial Inclusion Worker at Changing Lives
  • Ben Perkins – Head of Partnerships and Services at Plain Numbers
  • Cath Wohlers – LIAISE Manager at Illegal Money Lending Team


Aveni – ‘Consumer Duty: The Chief Risk Officer (CRO) Survey Results’ – 15/12/2022

The results of the Aveni survey of CROs and Senior Risk & Compliance Officers from across the UK Financial Services sector highlight a gap between where organisations currently are and where they need to be to comply with Consumer Duty regulations.

Aveni has just been listed in RegTech100 2023. Join Aveni CEO, Joseph Twigg and COO, Jamie Hunter in this webinar as they unpack the results of the survey, providing key insights from YOUR peers into CRO challenges and critical activities in meeting FCA’s Consumer Duty requirements.

Nicola Wee has written a Blog for Risk Coalition entitled ‘The changing role of risk executives as a result of the Consumer Duty requirements’.



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