General update
Last call for responses to the MaPS deficit budget consultation. This is an important consultation where those with good trending MI need to respond.
The purpose of this MaPS call for evidence is to understand what help can, or could, be offered where a client presents with a deficit budget, as well as what MaPS can do to enable this help to be given. This is obviously a really important topic impacting the whole debt advice sector and more widely for those in the debt resolution space undertaking robust income & expenditure assessments. Where affordability assessment providers used by creditors, debt buyers and DCAs establish a deficit budget then different customer journeys need to be considered where a direct transfer into a debt advice process may not identify viable debt remedies. If these providers have already explored income optimisation and entitlement to benefits and social tariffs with their integrated partners (e.g. EntitledTo, InBest, IncomeMax, Policy in Practice, Turn2Us) then alternative strategies need to be considered. This call for evidence will be useful in respect of the wider topic of protocols for dealing with priority creditors where the deficit doesn’t allow the payment of essential services like energy.
Link: https://maps.org.uk/2022/08/31/call-for-evidence-on-debt-advice-clients-with-deficit-budgets/
Ofgem launches new proposals to strengthen energy market and protect consumers
Ofgem announced on 24 November its quarterly update to the energy price cap for the period 1 January – 31 March 2023. The price cap is set to rise to an annual level of £4,279 in January 2023, but bill-payers remain protected under the government’s Energy Price Guarantee (EPG).
The strengthening proposals include the introduction of capital adequacy requirements designed to help reduce the risk and cost of supplier failures like we saw in 2021. Ofgem will also be requiring suppliers to ringfence Renewable Obligation receipts and monitoring closely the use of credit balances. The proposals look to protect current and future energy consumers by reducing the risk of future supplier failures and the associated costs and disruption. Some of the proposals have been attacked by British Gas.
Statutory Consultations come on the back of robust review findings announced earlier in the week by the regulator, asking 17 energy companies to drive up standards for consumers. They also build on the work the regulator has done over the last year to ensure suppliers have robust business models and their directors are fit & proper for the role, to minimise the risk of supplier failure, which comes at a cost to consumers. This may all sound very familiar to FCA regulated firms.
In their latest review, which looked specifically at how suppliers treat ‘Customers in a Vulnerable Situation’, they considered information submitted by 17 of the biggest domestic energy suppliers, detailing how the companies are:
- Identifying and recording customers in a vulnerable situation, and if they are adding them to the ‘Priority Services Register’, which offers additional support to customers in need
- Making free gas safety checks available to eligible customers
- Ensuring vulnerable customers on prepayment meters are identified and supported
- Providing useful information appropriate to customer needs
Since Ofgem’s initial assessment and ratings were formed, many suppliers have already responded positively based on the feedback from the review. All the action taken from all the Market Compliance Reviews so far can now be seen collectively.
Findings showed that, although some good practice was identified, all suppliers need to make further improvements, with the key findings being:
- Severe weaknesses were found in 5 suppliers – Good Energy, Outfox, SO Energy, TruEnergy, Utilita
- Moderate weaknesses were found in 5 suppliers – E (Gas & Electricity), Ecotricity, Green Energy UK, Octopus and Shell
- Minor weaknesses were found in 7 suppliers – British Gas, Bulb, EDF, E.ON, Ovo, Scottish Power and Utility Warehouse
Link: https://www.ofgem.gov.uk/publications/latest-energy-price-cap-announced-ofgem
International Economic Abuse Awareness Day (IEAAD)
26th November 2022 marks International Economic Abuse Awareness Day (IEAAD). One of their key developments over the past 12-18 months has been the growing partnership work with the UK finance industry, helping to shape responses for victim-survivors. I know a number of the circulation have supported this.
Link: https://survivingeconomicabuse.org/international-economic-abuse-awareness-day/
CAP report – ‘lifelines to safety’
Gareth sent this over during the week and it is receiving good publicity.
Over 4m people in the UK now depend on credit to make ends meet. CAP’s latest research, Lifelines to safety, reveals that credit is too often the only available source of help for people in difficulty. Much more needs to be done to help people achieve financial security and freedom – both now and in the future.
As reflected in the MaPS consultation and statistics by Citizens Advice and National Debtline, too many people have little surplus income after essentials, and this is only worsening in the cost-of-living crisis. 28.2m people in the UK (42% of adults) have borrowed money this year in the face of rising costs, with low income households borrowing from friends and family and missing payments on household bills in far greater numbers.
The CAP blog, Lifelines to safety: three steps to breaking the UK’s reliance on credit, unpacks the reasons why people are pushed and pulled towards credit to get them through financial storms. For too many the non-credit financial lifelines, such as insurance policies, benefits and grants from charities and local authorities are insufficient, hidden or lie beyond their reach. 34% of CAP clients were unaware they could ask for payment holidays on their household bills to help them in a crisis. CAP has reflected that many consumers turn to credit and face high interest charges from credit cards or overdrafts, or are forced to use higher-cost forms of credit, such as payday or guarantor loans. 11% of CAP clients have used a digital BNPL provider. There has been much commentary recently on the delays in engaging in debt advice and the interim period often involves more borrowing.
CAP has recommended that the industry:
- Improve financial resilience by shoring up incomes and supporting saving
- Increase ease of access to non-credit lifelines in a financial crisis
- Make credit safer for people who still turn to it in a crisis
Much of this aligns with the survey work that Chris Warburton and I did in the Credit Union sector. We continue to support the Stop Loan Shark campaigns, where Cath and Trish have been prominent with the Illegal Money Lending Team. Their data could be very relevant to the Credit Information Market Study.
Download the Lifelines to safety report to read our recommendations for how this can happen.
Request from Paul Lawton at NCO Europe – payment distribution over Christmas
I have been in dialogue with Paul at NCO and agreed that I would issue to debt solution providers distributing client money. If you could relay the message to the relevant team member then that would be very helphful.
ICO and Ofcom strengthen partnership on online safety and data protection
In anticipation of Ofcom taking on new duties in 2023 under the Online Safety Bill, the statement sets out their shared regulatory aims. They want:
- people who use online services to have confidence that their safety and privacy will be upheld and that they will take prompt and effective action when providers fail in their obligations; and
- providers of online services of all sizes to comply with their obligations and to continue to innovate and grow, supported by regulatory clarity and free from undue burden.
They want to promote compliance by setting clear expectations for industry on what they must do to meet both their online safety and data protection requirements. That includes particular support through the transition for small and emerging firms to help them thrive and grow. They will take action against services that don’t meet their obligations, sharing information and intelligence as appropriate and coordinating approaches to enforcement.
SDRP regulations – announcement by HM Treasury on 24/11/2022
I picked up the announcement at the Insolvency Practitioners Association (IPA) event from Vanessa’s LinkedIn post (Steve Coppard also covered this) during The Insolvency Service session in the morning. Fortunately, Paul Smith asked if there were any questions before going to Slido, so I stuck my hand up and asked whether The Insolvency Service were aware and how this would fit into the personal insolvency reform review. I am not sure whether this is the point captured below where they were deciding who was going to answer the questions. Left to right – Claire Hardgrave (Head of Insolvency Practitioner Regulation), Dean Beale (CEO) and Paul Bannister (Head of Policy). In the end, Paul did. Melanie and I managed to catch Paul and Claire over lunch around personal insolvency reform and the financial promotions/advertising debate, which heated up in the afternoon sessions. I have since had email follow-up from Claire.
The Government has published their response to the Statutory Debt Repayment Plan (SDRP) consultation. After reviewing all of the responses, the Government has decided not to lay regulations for the SDRP this year. Instead, all further decisions on the policy will be based on the outcome of the ongoing personal insolvency framework review, led by The Insolvency Service. Sam Roberts is part of Paul’s team and she has previously been involved in the Debt Management Plan Protocol. They are tasked with looking at a ‘full payment’ statutory debt solution. This is not currently part of the scope of the personal insolvency reform and consultation responses from across the sector. Paul has confirmed that he has the SDRP consultation responses and recognised submissions from across the sector.
IPA event – 24/11
Melanie and I travelled up to Manchester on the night of 23rd for a quiet DEMSA face-to-face meeting and catch-up before attending the IPA event on the Thursday. Tasha introduced us to a nice local Thai restaurant and I managed to discuss Wheelchair Rugby League with the local professional Rugby League talent in the wine bar next door.
The IPA event was a good networking session and nice to see many DEMSA affiliates and members, including Jenny and Conor over from Northern Ireland. Ciaran was leading the après event Irish party when we were catching a taxi and Melanie was ‘banking’ her CPD. Bev has her award nomination this week. Best of luck with this.
I was sat very near to David Mond (mobile phone viewing distance) and he was not shy in asking tough questions of the panellists. This included IVA advertising to the CEO of CreditFix. Advertising featured strongly. I have recently produced a Blog on this and the very different approach of the FCA around financial promotions. The Insolvency Service did make several references to the FCA Debt Packagers consultation (CP21/30). The Principal/AR policy rules (PS22/11) take effect on 8 December 2022, which will impact small firms with debt advice permissions that have appointed representatives that are substantially larger than the principal firm. This was a topic of discussion during the day and on Claire Hardgrave’s radar. My Blog highlights that it is most definitely on the FCA’s radar with their new data-driven toolkit.
Link: https://www.linkedin.com/pulse/financial-promotions-focus-kevin-still-consulting/
Vulnerability did feature, but not as I would normally recognise it. There is a marked difference in perceptions between the insolvency profession and the FCA regulated consumer credit forums. This was most in evident in the case law development session where vulnerability was frequently referenced on slides that were about serious fraud cases. Turn2us did present in the morning before lunch as the new partner with the IPA.
There was a session in the morning entitled ‘Vulnerability in insolvency and the impacts of the cost-of-living’. Peter Tutton supported this session along with National Numeracy. I am pleased that low numeracy levels are getting more ‘air time’. The discussion around Bankruptcy was interesting, but didn’t spark huge debate around the unaffordable costs of bankruptcy during the cost-of-living crisis. The Insolvency Service had opened the day with the latest personal insolvency statistics that I covered in last week’s bulletin. These still reflect the ‘lull before the storm’. There were several references to looking North to Scotland around personal debt solutions. I would have included DAS/DPP in the debate.
Dave Holland, Chief Inspector at the IPA, finished the day with a session entitled ‘Regulatory update’, though much had been covered earlier when the SDRP news broke and The Insolvency Service covered the personal insolvency reform. I am not any clearer on the timetable for this, given that HM Treasury has tasked The Insolvency Service with looking at alternatives for SDRPs in terms of ‘full repayment statutory solutions’. Dave provided an update on the IVA ‘volume provider regulations’.
The IPA 2021/22 Anti-Money Laundering report was available at the event and can be downloaded below.
Link: https://insolvency-practitioners.org.uk/news-and-notifications/
MaPS debt advice commissioning work
I have had the following email from Francis McGee, Sector Engagement Lead at MaPS:
Dear Colleague,
I’m sure you will have seen MaPS’ recent announcements about the next phase of our work to provide free debt advice across England.
I’m part of the MaPS commissioning programme team, leading on stakeholder engagement, and would welcome the opportunity to discuss the announcements in more detail, or answer any questions.
On 29 September we announced our intention to award medium term (26 month) grants to our current suite of partners who provide local community-based advice across England. This has been welcomed for creating extended funding certainty to these vital services. Our press release on this is here. We’ve since been working intensively on concluding the grant agreements and are grateful for the support of our partner service providers in this work.
On 4 October we announced our intention to award contracts for national telephone and digital advice services, business debt advice and DRO administration services. The relevant release is here. Following that announcement, we had to observe legally binding processes that are incumbent on us as an arms’ length body of Government. Yesterday we were delighted to confirm that all our new contracts have been signed.
Taken together these announcements are a major step forward for the provision of free debt advice, with MaPS’ total funding rising to £76 million a year from £43 million before the pandemic. As levy-payers and supporters of debt advice, you’ll be pleased that MaPS is using this additional funding not only to deliver more services, but to improve services, ensure quality, performance and value for money and to upgrade the real time information we get about services and clients across the sector, so we can measure our progress and respond to changing needs.
If you’d like to talk about these funding announcements, and also learn about our plans for the future of debt advice in England and how you can get involved, please let me know and I’d be delighted to arrange a call.
Looking forward to hearing from you.
Francis
Vanessa has also posted on LinkedIn around the award and the MaPS press release below. This is picking up some traction.
WADA has added their voice to the community debt advice debate. Amy Taylor (WADA) also spoke at the IPA event in the same ‘IVAs: Busting the myths’ session as Ken Marland, Paul Mason (CEO of CreditFix) and Laura Prescott (CEO of Debt Movement). WADA responded to the ‘Insolvency Review: call for evidence’ in October 2022. You can probably imagine some of the input at the event when their recommendation is abolishing IVAs.
Link: https://wearedebtadvisers.uk/news/we-need-to-talk-about-debt-advice
Link: https://wearedebtadvisers.uk/news/wada-responds-to-insolvency-review-call-for-evidence
Meanwhile, Sara Williams of Debt Camel has covered the StepChange mass variation report. Peter Tutton also robustly defended StepChange’s position on IVAs at the IPA event.
The mass variation has to be approved by creditors on 20 December 2022. StepChange has also written to the 3 main “creditor representatives” asking for their support to approve this variation. I spent some time with Peter Wordsworth at the IPA event and he is quoted as saying:
“Ideally, we’d like to see an equivalent sector-wide approach delivered through the (IVA) protocol, to make IVAs more resilient and flexible when client circumstances change.”
Link: https://debtcamel.co.uk/stepchange-mass-iva-variation/
Consumer understanding –blog by Ben Perkins at Plain Numbers
VRS has covered a guest blog by Ben Perkins at Plain Numbers. National Numeracy presented at the IPA event. Mike Ellicock from Plain Numbers spoke at the MALG conference earlier in November. With the Consumer Duty and cost-of-living crisis, it is an important topic in our thinking around effective communications and methods of delivery. Poor literacy and numeracy are strongly aligned with the FCA vulnerability guidance (FG21/1) which we discuss in the VRS training around Consumer Duty.
Credit information market study (MS19/1.2)
A topic close to my heart from my CRAs days with UAPT-Infolink and Equifax UK , where references to SCOR bring back memories. Some powerful statements early in the report as a teaser for wider discussion. This aligns closely with the FCA Consumer Duty. I posted on the day of publication.
Ensuring the credit information (CI) sector works well supports FCA strategic outcomes around fair value, suitability and treatment, and access. The FCA state that the recent sharp increase in the cost-of-living crisis is also likely to bring CI into sharper focus by driving greater demand for credit and increasing the risk of borrowers entering financial difficulty.
There are 5 main types of participants in the credit information sector:
- CRAs
- Data contributors
- Credit information users (CIUs)
- Credit information service providers (CISPs)
- Consumers
Consumer understanding of credit information is relatively low. It can be difficult for individuals to access their credit file through the statutory process and also dispute information. Doing this periodically can be hard where firms have put in place barriers for repeat free access. Debt advisers deal with this all the time.
Industry governance through the Steering Committee on Reciprocity (SCOR) has established the processes by which lenders and other data contributors share CI with mainstream CRAs. However, SCOR remains focused solely on traditional CI and the FCA believe is too narrow in focus and representation, including the timeliness of data sharing. Membership covers the 3 large CRAs and 8 trade associations with no representation of consumers or challenger CRAs. This really, really needs to be brought up-to-date.
The FCA has proposed that governance improvements can be achieved through a new body with a broader remit. This remit could include a role in supporting good and improved consumer outcomes through competition and innovation, while also agreeing to take forward other proposed remedies. This new body could also take responsibility for other relevant datasets currently shared by lenders with CRAs. The FCA see reform to industry governance arrangements as a key precursor to other potential remedies they are proposing. BNPL is an obvious area of focus. Gambling data was covered at the Vulnerability Summit yesterday.
Data sharing is very topical and warrants considerable discussion with key stakeholders who haven’t been properly engaged in this process and should be aligned with other data sharing initiatives and open banking developments.
The debt advice and debt solution sectors really does need to be more widely included in this process. Rehabilitation is a key theme. Registry Trust Limited (RTL) has some key initiatives in this area (e.g. partial settlements register). I am seeing Lex on Monday at RTL’s offices.
Specialist providers like Vulnerability Registration Service need to be contributors to these discussions.
Next steps
The FCA want your views on their findings and potential measures to:
- reform industry governance arrangements and agree a set of priorities for the industry over the next 3 years
- improve the quality and coverage of credit information
- enable greater competition and innovation through potential changes to data access arrangements and more timely reporting of key metrics
- support consumers to access and dispute credit information
The FCA is asking for feedback on the findings and potential remedies set out in the interim report by 24 February 2023.
Link: https://www.fca.org.uk/publications/market-studies/ms19-1-credit-information-market-study
Vulnerability Summit – 21/11/2022
Sonya Schofield chaired our panel session on gambling at the Vulnerability Summit on Monday where Martin Jones (Campaigner) made some heart felt contributions around preventions that could be readily adopted by the industry in the widest sense. I tried to provide some context to this around the Consumer Duty. Sonya provided case studies from recent work experience.
The event competed with the Football in the afternoon, but was well attended and Chris Fitch kept the speakers honest. I left before the ‘yoga’ session at the end. Good to catchup with many familiar faces, including David ‘stretch’ Murphy and Vanessa, where we continued our discussions from the Credit-Connect event the week before ahead of the MaPS and SDRP announcements above.
I had produced a Blog ahead of the event.
Link: https://www.linkedin.com/pulse/gambling-protecting-those-vulnerable-kevin-still-consulting/
Preventing cyber-attacks – security guide
98% of cyber-attacks rely on social engineering and whilst technology helps this can be quickly undone by the humans in your organisation. You can find out how socially engineered attacks are delivered and what you can do to combat the risks with this FourNet guide.
The most common attack style cyber-criminals use is phishing, a staggering 83% of all attacks. These usually arrive as an email pretending to be an organisation or person you trust, containing malicious content to access your network. My wife has recently started a new job with a major retailer and their training now looks at how customer service agents can be inadvertently used as part of the fraud process. As of October 2022, NCSC has received over 15m reported scams.
NCSC is encouraging more vigilance over Christmas and with events like Black Friday and Cyber Monday. Bargain hunters are being urged to bolster their cyber security in the approach to the festive season after new figures revealed victims of online shopping scams lost on average £1,000 per person in the same period last year. I had to warn my adult children and wife yesterday as they were shopping online for bargains. I am not sure whether I am a beneficiary.
Some important messages for debt advisers in terms of keeping customers alert over the festive period and into the New Year.
There has been an important announcement on the extension of the Cyber Essentials grace period to April 2023.
Link: https://fournet.co.uk/security-quick-guides/quick-guide-to-socially-engineered-attacks/
Link: https://www.ncsc.gov.uk/collection/phishing-scams
Link: https://www.ncsc.gov.uk/information/cyber-essentials-technical-controls-grace-period-update
Link: https://www.ncsc.gov.uk/news/festive-shoppers-urged-to-be-cyber-aware
Events
‘Debt Management, Connected’: Time for real collaboration? event on Monday 28/11/2022
I am attending this event at Toynbee Hall on Monday.
Credit Strategy – Collections & Vulnerability Summit – Midland Hotel, Manchester – 30/11/2022
I am looking forward to speaking at this event on 30 November 2022, again at the Midland Hotel, Manchester. I think that I am now doing 2 sessions, including ‘Personalised long-term collections plans: Myth or reality?’. I am also attending the awards dinner. Tasha has agreed to put me up at her B & B again as well.
Sonya Schofield is running one panel session with Kathryn Isherwood at Sky. Welcome to the Saturday bulletin Kathryn. Kathryn is also down to do the spotlight on debt sale and purchase.
It will be interesting to contrast the ‘How the cost-of-living crisis is shaping our understanding of vulnerable customers’ debate with Rachel Duffey and Emma Gibbons with some of the messages at the IPA event. Following his performance at the FCA earlier in November 2022, I am looking forward to the Minesh, Amplified Global, session entitled ‘Language and debt’. Numeracy and literacy are definitely getting more exposure around getting messaging right.
Link: https://www.creditstrategy.co.uk/cv-summit-speakers
Minesh Patel co-founder of Amplified Global™. As previously reported, Amplifi is an intelligibility tool that helps lawyers objectively assess and simplify the language used in contracts and other legal documents, making it easier for customers and consumers to understand and engage with the content. Minesh discussed various hidden disabilities when presenting the Mixed Messages report with StepChange at the FCA on 15 November 2022. Read more at the link above. DEMSA is working with Amplified Global on some of their innovative sandbox activity and we are encouraging members to participate.
VRS webinar on 13/12/2022
Link: https://www.linkedin.com/events/vulnerability-whatit-sreallyabo6999017657077219328/about/
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