DEMSA update: FG23-2 / DPDI / Consumer Duty / AI / CP23-5 / Loan Sharks / Training / Events

General update

The PM has said that “confidence is returning” after ONS figures showed the economy grew by more than expected in January 2023. The economy expanded by 0.3% in January, rebounding from a sharp fall in December 2022. The data comes ahead of the Budget next Wednesday when Chancellor Jeremy Hunt will set out the government’s growth plans.

Energy support expected to be maintained

Currently, the government is limiting the energy bill of a typical household to £2,500 a year. This is due to rise to £3,000 on 1 April. The BBC understands that the chancellor is expected to keep the Energy Price Guarantee at current levels for a further three months from April.

Childcare support

Parents of children aged nine months to three years would get 30 hours of free care a week during term time, subject to conditions. Currently the benefit only applies to children aged three and four.

The average annual cost of a full-time nursery place for a child under two in Great Britain is now £14,836. A report by the charity, Coram, says average costs have risen by 5.9% in the past year while the availability of places has also dropped.

International Women’s Day 2023

Fiona Hoyle of the FLA made the PowerList of Inspirational Women in Trade Associations.


Maximising income

Useful link on the Debt Advice Handbook around maximising income.


Breathing space and mental health crisis moratoriums

This includes a guide to breathing space for tenants.

The Debt Matters round-up for February 2023 features the Debt Packagers consultation.  



TDX Group news

Congratulations to Isobel Crosse for starting a new position as Head of Strategy and CX at TDX Group. I am hoping to catchup in early April before the Credit Summit 2023 on 27 April.

PayPlan becomes first debt advice provider to introduce British Sign Language video interpreting service

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After being accredited for ISO 22458 (consumer vulnerability and inclusive design) in the first cohort, PayPlan has become the first debt advice provider to introduce British Sign Language video interpreting service. PayPlan has teamed up with British Sign Language (BSL) Video Interpreting Service, SignVideo, to improve accessibility to customers across the UK.


Firstsource case study with UK utility company

I spotted this LinkedIn post. It relates to a UK electricity and gas supply company that had a separate, specialist team to handle arrears collection. This is not unusual. Following a review, the Utility sought a new approach, where the core customer service team would handle the entire customer journey.

Success measures were:

  • Payments taken on the call
  • Customer satisfaction with the process
  • Compliance with Ofgem Ability to Pay and Reasonable Steps requirements

Increasing amounts of arrears collected, reducing complaints and boosting customer satisfaction were key objectives:

  • 35% increase in average cash collected on the call itself – up from £117 to £159. (£100 is seen as good)
  • 11% increase in volume of payments collected
  • 50% increase in overall collections performance
  • +70 NPS
  • Priority Service Register (PSR) complaints cut by 50%


Inicio AI shortlisted as a finalist in the Innovative StartUp category at the Midlands StartUp Awards 2023

Congratulations to Rachel and the team.

Conversational AI

On a related topic that Chris Warburton and I are exploring, analysts are predicting that conversational AI will automate 6 times more agent interactions that it does today. Something we will be discussing at the FourNet/NICE CXone/Fortinet event in Birmingham on 29 March 2023. There remains much discussion around ChatGPT. We will also be discussing vulnerability detection as a ‘hot topic’.


Digital DRA up for an award

This year’s North West Start Up Awards have named the Digital DRA as finalists. These awards acknowledge the significant contributions made by Start Ups to their industry, the economy, society and their local communities. Congratulations to Dan, Arren and team.

Savvy Shopping: Pensioner to-be reveals budgeting superpower

A case study by IE Hub.


Manu Peleteiro blog

He discusses how firms have started offering support to help people claim the benefits they are eligible for. These new providers include affordable lenders and credit unions, utility companies, debt advisers, and money management applications.


Perch Group – ISO 9001 and ISO 27001

Perch Group has announced that it has been awarded ISO9001 and ISO27001 certifications for the provision of debt purchase and debt recovery, including legal services.

Simon Unsworth, Chief Risk & Customer Officer, Perch Group said:

“Gaining ISO9001 and ISO27001 certification is an important step in Perch Group’s wider programme of work to demonstrate we are committed to upholding the highest standards of best practice for the benefit of the thousands of customers we deal with and help, clients we serve, and regulators we are accountable to. As an ambitious, fast-growing firm founded in 2018, we are particularly proud of Alcumus’ report’s recognition of our mature management system supported by a culture of continual improvement and enthusiasm at all levels.”

In May 2022, Perch Group announced the completion of a management buy-out and significant investment from Quilam Capital to fuel its ambitious growth plans.


Debt Adviser Training around illegal money lending – proposed event in April 2023

This is hugely relevant with the recent FCA “Dear CEO” letter to the debt advice sector where identifying illegal money lending (loan shark activity) is specifically referenced in the letter Annex. This is applicable to personal insolvency as well. Victims of loan sharks generally have regulated debts, including priority debts. These become lower priorities for a consumer when a loan shark is involved where multiple characteristics of vulnerability may be involved.

See also  DEMSA update: Credit Summit / StepChange plan / Open Banking / Consumer Duty / ESG / Operational Resilience / Events

DEMSA actively supports the work that Stop Loan Sharks England is doing and the lobbying by Patricia Cassidy and Cath Wohlers (both on visible copy list). We are encouraging FCA regulated debt advice firms to take advantage of this and some of the work they have been doing around open banking and the information this provides.

Providers like PayPlan have taken a very pro-active approach and have also become accredited for the BSI ISO 22458 (consumer vulnerability and inclusive design) kitemark. Emma Gibbons has agreed to participate in the proposed event with Stop Loan Sharks England to explain more about their training and its relevance to the Consumer Duty and wider vulnerability assessments. The Vulnerability Registration Service (VRS) has specific flags for this type of activity.

I am optimistic that MaPS will be able to support with Chris Warburton chairing the event, as he has done recently with several Credit Union and Community Banking events.

I have posted on this on LinkedIn and this is gathering some momentum. I think this is relevant to the new SIP 3.1 that the Insolvency Practitioners Association (IPA) has been promoting around vulnerability identification. The average victim has other non-priority and priority debts. A relatively high number of homeowners relative to current volume IVA averages.

We are looking at an event week commencing 10 April, probably 11 April or 13 April. Target audience will be those looking at policy and operationalising policy at an adviser level. This will be relevant for ‘Duty champions’ and those delivering transformational plans. Sponsors very welcome.


FG23/2 – FCA confirms help for mortgage borrowers struggling with payments

The FCA has published new data and analysis on the mortgage market which is very relevant for debt adviser horizon scanning. In addition to the households already behind on payments, they estimate that an additional 356,000 mortgage borrowers could face payment difficulties by the end of June 2024 as fixed rate deals unwind. On a positive note, this is down 214,000 from the 570,000 borrowers the FCA previously estimated in September 2002 as a result of changes in market expectations of the Bank of England base rate. Those rolling off a fixed rate deal could end up paying an additional £340 a month on average. This is slightly lower than my average prediction of £400.

Eric Leenders, Managing Director of Personal Finance at UK Finance, said:

“Despite the fall in applications towards the end of 2022 the mortgage market remains steady. Looking ahead, we expect a softer market compared with the past two years as cost pressures weigh on households, although refinancing levels will be robust due to the 1.8 million fixed rate deals scheduled to end this year.

“At the same time, consumers are changing the way they spend their money, moving away from luxury spending to second-hand shopping. As cost of living pressures persist throughout this year, many people may need to draw upon their savings to help with their bills. Lenders are looking to help anyone who is worried about their mortgage, loan or credit card payments. Those worried about their finances should speak to their lender as soon as possible to discuss the options available.”

The FCA is also working with the MaPS, consumer groups and lenders to raise awareness of the help available to mortgage borrowers worried about keeping up with payments. This should be applicable to the regulated debt advice sector and personal insolvency practitioners. Following the summit in December 2022, lenders have confirmed they expect to increase communications to potentially impacted borrowers to 20.5m contacts over the next year. As with the requirements of the Consumer Duty more generally, the communication strategies need to be thought about carefully to avoid a repetition of the poor communications that arose out of the ‘Persistent Debt’ rules.

FG23/2 represents the finalised guidance and can be found at the link below. The guidance should be read alongside the Mortgage Conduct of Business Sourcebook (MCOB), the Tailored Support Guidance (TSG), Guidance for firms on the fair treatment of vulnerable customers (VCG) and the June 2022 Dear CEO letter which confirmed the FCA expectations of firms. The sector has also received “Dear CEO” letters in February 2023.

Expectations of impacted firms include:

  • Considering what more they can do to encourage mortgage borrowers to think about switching to a less costly option where that is available
  • Giving all borrowers in payment difficulty appropriate forbearance that is in their interests and that takes account of their circumstances
  • Providing all customers with an appropriate level of care and support. The level of care needed for customers who have characteristics of vulnerability may be different from that for others and firms should take particular care to ensure they are treated fairly. The FCA Vulnerable Customer Guidance (VCG – FG21/1) sets out their view of what firms should do to comply with their obligations under the Principles (including Principle 12 going forward) and ensure they treat customers in vulnerable circumstances fairly
  • Supporting borrowers in payment difficulty or struggling with debt, by making them aware of, and helping them access, money guidance or free debt advice
  • Ensuring that any fees and charges levied on any borrower because they are in payment shortfall are fair and do no more than cover a firm’s costs
  • Being transparent about the range of options they can consider when a customer is facing financial difficulties to enable customers and those advising them to understand and evaluate the options. Where possible firms should set these out on their websites
See also  DEMSA update: IVA insight / CP21-34 / Breathing Space / Cyber-resilience / Credit Summit

With regard to wider debt advice, the FCA has confirmed in FG23/2 that they considered the expectations in paragraph 5.24 of the TSG, that firms should take account of wider borrower indebtedness and other priority debts, to be relevant to borrowers struggling due to the rising cost of living.

Many respondents commented on credit file reporting. Two consumer representatives suggested the FCA should issue more prescriptive, clearer and stronger requirements on how lenders should report forbearance arrangements to CRAs. Some respondents suggested improving consumer communications to ensure any potential impact on credit files did not deter borrowers from seeking the help and support they need. This is a common challenge for debt advice providers. The is continuing the wider work following the publication of the Credit Information Market Study Interim Report and Discussion Paper. This sets out our recent findings on the credit information sector, including those relating to the reporting of forbearance arrangements, and considers potential wider remedy proposals to improve the consistency and quality of data.

Interestingly, the mortgage intermediary “Dear CEO” brings in the concept of a “co-manufacturer” raised by DEMSA in its response to CP23/5 (debt packagers) where 2 parties could make up the parties responsible for a debt solution (e.g. Continuing money adviser, payment distributor). Mortgage intermediaries need to consider their role (i.e. whether they are solely acting as a distributor or are co-manufacturers and distributors). A firm would be considered by the FCA as a co-manufacturer where they can determine or materially influence the manufacture of a product or service.

The “Dear CEO” letter to mortgage intermediaries reflects that there are segments of the mortgage market where customers are more likely to have characteristics of vulnerability. One example is second charge mortgages, where customers may be more likely to have characteristics of financial vulnerability due to affordability constraints or credit impairment. Another example is later life lending, through products such as lifetime mortgages and retirement interest-only mortgages. Both of these product sets can have costs and features which customers may be unfamiliar with.

FLA figures show that new business second charge mortgages grew by 8% in January 2023. The distribution by purpose of loan in January showed 61% of new agreements were for the consolidation of existing loans, 14% for home improvements, and a further 20% for both loan consolidation and home improvements. Consumer car finance new business volumes fell by 3% in January 2023. The consumer new car finance market reported a fall in new business of 6% by value and 10% by volume in January compared with the same month in 2022.  In the 12 months to January 2023, new business volumes in this market also decreased by 10% compared with the same period in 2022.

FOS has a webpage for financial difficulties with mortgages.







Data Protection and Digital Information (DPDI) Bill

The Information Commissioner’s Office (ICO) and John Edwards welcomed the reintroduction of the Data Protection and Digital Information Bill and support its ambition to enable firms to grow and innovate whilst maintaining high standards of #dataprotection rights.

John Edwards said:

“Data protection law needs to give people confidence to share their information to use the products and services that power our economy and society. The Bill will ensure my office can continue to operate as a trusted, fair and independent regulator. We look forward to continuing to work constructively with the Government to monitor how these reforms are expressed in the Bill as it continues its journey through Parliament.”

Technology Secretary Michelle Donelan introduced the Bill on 8 March 2023. It is heralded as a new ‘common-sense-led’ UK version of the EU’s GDPR and will reduce costs and burdens for British businesses and charities, remove barriers to international trade and cut the number of repetitive data collection pop-ups online.

A stated aim is to increase public and business confidence in AI technologies, which may be of interest to many on the circulation. I have included a link to an ICO Blog entitled “Why addressing AI-driven discrimination is so important”. Diversity and inclusion are becoming an increased focus for the FCA that is now routinely referenced in Consumer Duty correspondence.

Interestingly, the Mortgage Lenders “Dear CEO” letter (link above) has some interesting direction under Data Analytics under Annex. Minesh and Faith at Amplified Global will probably be interested in the ‘Consumer Understanding’ section.

Data analytics, Consumer Understanding and Consumer Outcomes

Firms should carefully consider the requirements of the Duty as they make more use of artificial intelligence (AI), advanced analytics, and big data, including, among other things:

  • The cross-cutting rules on acting in good faith and avoiding foreseeable harm, with a consequent likely need for firms to have a prior detailed strategy for these developments in analytics and for due diligence on such tools and their use which takes careful account of customers’ interests (as well as all other relevant ethical, legal and regulatory considerations). See FG22/5 para 5.12 which discusses good faith in relation to AI
  • The consumer understanding and consumer support outcomes and consequent need for analytics-driven decisions to be communicated to impacted customers in a way that is understandable to them, with appropriate support provided to them (FG22/5 chapter 11)
  • The rules and guidance on monitoring outcomes and consequent need to provide for thorough monitoring and understanding of customers’ outcomes from such analytics, and for swift intervention if poor outcomes emerge  
See also  SDRP consultation / DRS awards / Operational Resilience / SFS / Open Banking / Events...

The UK Finance blog provides further context to the new Bill, including digital identities and smart data.  




Financial Services Consumer Panel response: CP23/5: Debt Packagers

The Financial Services Consumer Panel has responded to CP23/5. The Consumer Panel is a statutory body. The Financial Services Act 2012 requires the FCA to establish a Panel to represent the interests of consumers.  They work to advise and challenge the FCA from the earliest stages of its policy development to ensure they take into account the consumer.

The Panel continues to support FCA’s proposal to ban debt packagers from receiving remuneration from debt solution providers. The Panel recommends the FCA adopt a more assertive stance than “monitoring” the market, which is in line with the DEMSA response.

They recommend that the FCA should:

  • Draw attention to this issue in its communications to firms about the new Consumer Duty
  • It should complete multi-firm work on the outcomes consumers receive from non-profit debt advisers
  • It should consider a s165 data request after a suitable interval to enable a comprehensive assessment of sector business models, both within and outside the proposed ban

They are advocating a one month implementation window.


I have also posted a Blog around CP23/5 (debt packagers) and The Insolvency Services IVA statistics for 2022.

Ombudsman News and open consultation paper – March 2023

FOS is consulting (attached) on proposed temporary changes to the way they report business-specific complaints data. It follows on from a similar initiative in November 2021, which led to around 100 businesses making 7,000 offers to resolve complaints more quickly.

They propose to create a separate category in their biannual business-specific complaints data to record any complaint that is resolved by a fair and reasonable offer put forward by a business within 14 days of FOS requesting the respondent business’s complaints file. This is the point at which FOS inform both parties that they are satisfied that the complaint is chargeable – a point often called “conversion”.

Responses to reach FOS by 5.00pm on Monday 20 March 2023.



VRS Consumer Duty Training – Next date is 20 March 2023

We have really good attendance for the event on 20 March 2023. Places still available. Delegates so far have included Challenger Banks, Motor Finance, Debt Management, Debt collection, Insurance, Retail Credit, Law firms, Consumer Credit, Debt Charities & Personal Insolvency.

The Association of Professional Compliance Consultants (APCC) has been promoting the events for us. We must be doing something right!



I am attending the Qualco and CCR Magazine ‘Technology and Innovation in Credit’ event on 23 March in Bristol. Some great speakers, including a number on the circulation.  

Cyber-security event

In 2022, 39% of UK businesses identified a cyber-attack, as highlighted by the Cyber Security Breaches Survey. Cyber-security is important for firms of all sizes but, for small businesses especially, knowing where to start can be difficult.

The National Cyber Security Centre (NCSC) is the UK’s technical authority for cyber security and, to coincide with the launch of the latest phase of the Cyber Aware campaign, they are hosting a free Digital Loft webinar event on Tuesday 28 March 2023, 14:00-15:30.

The webinar will highlight the significant financial and reputational impact cybercrime can have on small business owners. But it will also set out how the NCSC, with its suite of tools, guidance and advice, can support SMEs, micro businesses and sole traders to help protect them from these threats. The event will be led by NCSC CEO, Lindy Cameron, and will feature speakers from the Federation of Small Businesses and BT who will share their advice on building resilience.

It will also showcase 2 NCSC products specifically designed for small businesses: the Cyber Action Plan and the new Check Your Cyber Security tool. These will be demonstrated live during the event, followed by a Q&A.


In January 2023, PayLink Solutions published a blog around the importance of cyber-resilience. This touches on the importance of ISO 27001 and the impending changes in April 2023 that DEMSA has previously reported on. Becky McClory, Head of Information Security, provides some top tips for firms in our sector.   


On the 29 March 2023, I am supporting FourNet, NICE CX-One and Fortinet around the Consumer Duty. Operational resilience will be a key topic, including cyber-security. Happy to speak to anyone that missed the Tattu event on 2 March 2023 and other interested parties.    

Credit Strategy Credit Summit 2023 – 27/4/2023

The new date of 27 April 2023 is confirmed at the QEII Centre. I am on with Sabyasachi Mukherjee, Head of Credit Risk at Monese.  


MALG conference

The MALG Conference will return to the Birmingham Repertory Theatre on Thursday 9 November.

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