DEMSA update: Government Debt Strategy / Cyber-security / Consumer Duty / Collaboration / Training / Events

Bank of England raises interest rates to 4.5%


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As predicted the Bank of England has raised interest rates from 4.25% to 4.5%. The next review is 22 June 2023. CPI inflation was 10.2% in Q1 2023, but is expected to fall sharply in April 2023. On 5 May 2023, ONS published the latest data and trends about the cost-of-living crisis. This explores changes in housing costs and how this is affecting people, both private tenants and mortgage holders.


The Vulnerability Registration Service (VRS) supported the recent launch of the Equifax UK and TDX Group report entitled ‘Making ends meet: unravelling the cost of living spiral‘ where James Hilton predicts that we will see more households falling into debt for the first time due to the mortgage shock expected later this year, when 1.4m consumers could face a 50% increase in their monthly mortgage repayments.

These predictions are supported in the debt solution sector where we are seeing more higher income households presenting for debt advice sessions. The FCA published FG23/2 earlier in 2023 so that there is more support for mortgage borrowers struggling with rising payments. The FCA has set out the ways mortgage lenders can help customers worried about, or already struggling with, their mortgage payments because of rising living costs.

MAT – ‘debt storm’ brewing

Money Advice Trust has responded to the interest rate rise and published research that the average level of priority debt – including council tax, energy and rent arrears – held by callers has risen 54% since 2018, from £2,642 to £4,080.  

In its new spotlight briefing, Counting the costs, the charity reveals that:

  • 18% of callers to National Debtline in 2022 said their income being too low for their basic needs was the main reason for their financial difficulty – the most common reason cited by callers
  • 32% reported using credit in the previous 12 months to cover essential costs like energy or council tax
  • 79% were worried about being able to pay for essentials due to rising costs

In terms of demographics, 53% of customers engaging with National Debtline are from low-income households of below £20,000 per year, with little financial buffer to fall back on. 72% live in rented accommodation and are therefore at risk of rent rises as interest rates rise. 57% have between 1 and 5 debts and 14% have more than 10 debts.

41% of National Debtline clients have a deficit budget, where their income is not enough to cover essential costs. The average monthly shortfall has grown from £308 in 2022 to £393 in 2023.

Citizens Advice has published a release entitled “Our bleakest-ever start to the year”. National Debtline and Citizens Advice are 2 of the 3 MaPS funded national debt advice providers from February 2023. Local Citizens Advice offices across England & Wales helped record numbers of people between January and April 2023. 9,600 people a day on average. People needing crisis support such as food bank referrals or charitable grants increased by 178%. For the first time on record, more people than ever faced a monthly bills deficit where they had more going out than coming in.




Insolvency Service newsletter – Spring 2023

The 2023 Insolvency Service’s annual event Insolvency Live! 2023 takes place in London on Monday 10 July.

Recent blogs:

See also  Credit & Collections Technology Think Tank 2021 Session 1

The procurement page may be of interest to some on the circulation.



Ofwat to take action against companies failing customers

Together with CCW, the independent voice for water consumers in England & Wales, Ofwat has commissioned research to ensure customer views and expectations are built into the proposal and the consultation is now open to the wider public and businesses.

Ofwat is planning to introduce new regulatory requirements on how companies treat their customers, including customers in vulnerable circumstances, in the form of a new licence condition for each water company in England and Wales. A consultation has opened on a new licence condition to ensure companies better reflect customer expectations, drive higher standards of customer service and support the full diversity of customer needs.

The changes will mean that each company must ensure:

  1. customers are well-informed at all stages of the customer journey;
  2. when something does go wrong, customers can rely on their company to put it right; and
  3. all customers’ needs are identified, understood and met by companies in the services and extra help they provide.

The consultation closes on Friday 7 July 2023 and Ofwat will publish the licence change in the autumn.

Meanwhile, Ofwat is looking to penalise water providers for failing to monitor storm overflows.  




Debt management and technology — the I&E challenge

Before we get into the Government Debt Strategy, a number on the circulation have been engaging with Joe Surtees, who is on a career break at the moment, but actively posting. He has published a new Blog that is a follow-on from the one on debt management and AI which several have responded to.  

I had a call with Dylan, Gareth and Mark yesterday of IE Hub and they are looking at ways of innovating in this space.

I would encourage firms to post as this may have long-term benefits in setting the scene in terms of what is already available in the marketplace.   


Link: – original Blog

2023-2026 Government Debt Strategy – Debt Functional Standard

Further to the launch of the Vulnerability Toolkit (V2) in April 2023, the Government Debt Strategy 2023-2026 has been published, as previewed at the last Fairness Group meeting at the end of March 2023.

It feels like there is increasing alignment between the UK Regulators’​ Network (UKRN) regulators, including the FCA, and government agencies, especially around data sharing and the treatment of consumers with characteristics of vulnerability.

The strategy discusses what is meant by ‘Fair Debt Outcomes for All’. Problem debt and avoidable debt feature, notably cross government (up-to-date) data sharing and improved policy design. Standardising the government’s approach to assessing affordability will be welcome news. This will be of interest to many on the bulletin distribution.

I welcome the goal of consistent assessments of vulnerability and affordability in line with industry standards. I am a strong supporter of the wider use of the Digital Economy Act (DEA) information sharing powers to identify and pilot data driven ways to prevent problem debt occurring, including more engagement with private sector firms in the supply chain.

Delivering the right outcomes for indebted individuals aligns strongly with the Duty along with more coordinated fraud prevention. There will be a review of ‘debt metrics’ and hopefully wider adoption of BSI ISO 22458 (inclusive design and consumer vulnerability) now promoted in the Debt Resolution Services framework.

Economic Abuse Toolkit

The Economic Abuse Toolkit was updated on 12 April 2023. This forms part of the joined up material from the Fairness Group.

This involved collaboration with the debt advice sector and like the recent collaboration on illegal money lending with Stop Loan Sharks England and the Centre for Social Justice (CSJ) needs to be deployed at a frontline advice level. As part of FCA Consumer Duty planning, vulnerability policies, training and ‘operationalisation’ need to be evidenced by debt advisers whether dealing with consumer credit debts or from other creditors.

See also  DEMSA update: Economy / Debt advice - value-for-money / August debt stats / Consumer Duty / Events

VRS has been running Consumer Duty training (see below) since October 2022, this is now more granular as we approach 31 July 2023.



FCA findings from review of fair value frameworks

The FCA has reviewed 14 firms’ fair value assessment frameworks under Consumer Duty and shared their observations ahead of the implementation deadline on 31 July 2023. Sheldon Mills has strongly reinforced these messages in the Ernst & Young Global Consulting Services webinar on the Duty chaired by Christopher Woolard CBE. Chris Warburton and I attended this webinar with over 700 attendees. Chris has summarised.  

Link: – An interesting focus on MI, evidencing, culture and training really came through in the discussion


The FCA has flagged a number of ‘areas for improvement’. They are also reviewing the findings of a survey of 1,100 firms, to better understand the progress smaller firms are making in different sectors and on different aspects of the Duty. They will use the findings to carry out targeted engagement with smaller firms.

There is nothing to suggest that fee charging debt management firms (DMCs) were involved in the group of 14. DMCs must consider at least the following:

  • the nature of the product, including the benefits that will be provided or may reasonably be expected and their qualities 
  • any limitations that are part of the product (e.g. excluded debts) 
  • the expected total price customers will pay, including all applicable fees & charges over the lifetime of the relationship between the customer and the DMC

As per the February “Dear CEO” letter, the cost-of-living crisis will be a key consideration where there lengthy projected product lifecycles as in the case of a DMP.

The regulator has identified 4 key areas for further consideration by firms:

  1. collecting and monitoring evidence that demonstrates that products and services represent fair value
  2. clear oversight and accountability of the necessary remedial actions if they do not provide fair value
  3. where relevant, ensuring sufficient analysis of the distribution of outcomes across groups of consumers in the target market, beyond broad averages, to demonstrate how each group receives fair value
  4. summarising and presenting fair value assessments in a way that enables decision-makers to robustly discuss whether the product or service represents fair value, such as by being clear on any limitations in the analysis or evidence

Customer segmentation and vulnerability assessments appear critical to this process as part of the wider DMP Product Assurance Frameworks. The EY survey results below suggest that evidencing good customer outcomes is top of mind for many firms.


Link: – Product Assurance Frameworks

EY survey results with 82 days to go to ‘Consumer Duty go live’

Evidencing good customer outcomes through MI83%
Delivering and embedding cultural change39%
Providing training to staff across the organisation29%
Working with commercial partners across the distribution chain28%
Ensuring products & services represent fair value to consumers27%
Establishing robust governance arrangements25%
Accelerating remediation activity for areas of harm20%
Delivering identified technology changes16%

FCA Warnings

As a continuation from the updates last week and ahead of the FCA policy rules for debt packagers, here are more warning links.






Six reasons why your organisation should report a cyber attack

A blog post from NCSC and ICO aims to dispel common misconceptions that can discourage organisations from reporting a cyber attack. NCSC and ICO are concerned about incidents going unreported, which denies organisations the opportunity to learn from them and prevent future attacks. They offer advice on best practice offered to help organisations understand their responsibilities and the risk to their data and reputation.

See also  2021 Credit & Collections Technology Think Tank Session 4

Leading cyber security experts are pressing organisations to be more open about their experience of cyber attacks, to encourage reporting and prevent future incidents. In the new joint blog post, the National Cyber Security Centre (NCSC) and the Information Commissioner’s Office (ICO) identify 6 misconceptions that can discourage organisations from reporting attacks, particularly ransomware attacks, and is setting out to dispel them.

The six ‘myths’ which the NCSC and the ICO have identified as commonly held by organisations that have fallen victim to cyber incidents are:

  1. If I cover up the attack, everything will be ok
  2. Reporting to the authorities makes it more likely your incident will go public
  3. Paying a ransom makes the incident go away
  4. I’ve got good offline backups, I won’t need to pay a ransom
  5. If there is no evidence of data theft, you don’t need to report to the ICO
  6. You’ll only get a fine if your data is leaked

More than half (57%) of UK businesses have been impacted because of a cyber security/information security incident caused by a third-party vendor or supply chain partner, according to new research published by The report found that nearly one in three (30%) cite managing vendor and third-party risk as a top information security challenge, with average fines following a data breach or violation of data protection at £237,402. This report closely follows the warnings by the newly appointed Deputy Prime Minister Oliver Dowden about credible incoming attacks targeting critical national infrastructure and supply chains by unpredictable actors.  These are just a few of several findings in’s latest State of Information Security report, which surveyed 500 information security (infosec) professionals in the UK, comprising managers, directors, and C-level executives.




Consumer Duty Training

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DebtStream has announced a brand new partnership with C&R Software, opening up new possibilities for their Debt Manager clients.



From Heidi’s posts it looks like the MALG National Members Meeting at the London Transport Museum last week was a success. Some important discussions on Consumer Duty and activities in the Energy sector. I spotted Vanessa and Peter in action. Looks like Muna in action next with Craig and Chris Leslie. Good to have the FCA in attendance.

RTL Annual Review

The Registry Trust (RTL) May 2023 Newsletter is out. Lex Jones, CEO of RTL, looks like she has had a busy week from pictures on LinkedIn.

Recording of VRS event on 9/5/2023

If you missed the webinar last week, you can catch up at the link below. Excellent presentations from IncomeMax, Healthy Home Solutions, Data on Demand and the VRS. Well done to Kirstie Gatter and Helen Lord of Vulnerability Registration Service (VRS), Daniel Woodhead of IncomeMax, Simon Gregory of Data On Demand and Derek Owen of Healthy Homes Solutions and the Cadent Gas Limited work.

Further to the launch of the Vulnerability Toolkit (V2) in April 2023 and the Government Debt Strategy 2023-2026 in May 2023, problem debt and avoidable debt feature, notably cross government (up-to-date) data sharing and improved policy design. Standardising the government’s approach to assessing vulnerability and affordability is welcome news. I am on the Vulnerability and Affordability sub-groups with the Fairness Group in 2023/24.  


How RegTech can help firms monitor and evidence Consumer Duty outcomes – 18/5/2023

Mark and Steve will take a closer look at the challenges CSA firms face with the fast-approaching deadline of 31 July 2023. The Regulator’s focus is on how well-prepared firms will be to monitor and evidence compliance to the four main outcomes: products and services, price and value, consumer understanding and consumer support. Many of these requirements extend to the debt solutions sector.


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