In today’s bulletin
- General update
- Mixed Messages event at FCA – 15/11
- Insolvency Stats
The Autumn Statement dominated economic and political events this week, where many of the pre-event interviews and releases meant that there weren’t many surprises on personal tax and budget cuts for government agencies. The NHS came out better than I thought. Local councils seem to be taking advantage of the 5% allowable rise for council taxes. How tailored forbearance will actually be delivered will be of interest to many, especially from April 2023. The Institute for Fiscal Studies (IFS) think tank has said that the UK has entered a “new era” of higher taxes. Recession seems to be ‘officially’ upon us. With the tax thresholds frozen to 2028, this will have a creeping impact, much like mortgage rates rises depending on when fixed rates come to an end. Existing homeowners (like me) will be raising their eyebrows that a predicted (by OBR) drop of 9% in house prices is expected between now and Autumn 2024. The regulators are looking at pressure on banks to increase savings rates. Pension returns will be under close scrutiny.
Chancellor Jeremy Hunt said the government would cap the increase in social rents in England at a maximum of 7% in 2023-24, rather than the 11% potential rise under previous rules. This cap does not apply to shared ownership rents or private sector rents. There is an ONS private housing rental index for October 2022. Private rental prices paid by tenants in the UK rose by 3.8% in the 12 months to October 2022, up from 3.7% in the 12 months to September 2022.
The headline tax measures included:
- Tax thresholds being frozen until April 2028 resulting in more tax being paid over the course of time with thresholds frozen
- The top 45% additional rate of income tax starting for people earning over £125,140, instead of £150,000
- Local councils in England being allowed to raise council tax by 5% a year without a local vote, instead of 3% currently
For small businesses, the Autumn Statement confirmed that the current VAT registration threshold of £85,000 will be maintained until April 2026.
HMRC issued a bulletin on Thursday stating that the chancellor had set out the government’s plan to put public spending on a sustainable footing and get debt falling, while protecting vital public services and prioritising the needs of the most vulnerable. A focused Autumn Finance Bill will be introduced next week to legislate for some of the measures announced this week. Documents published alongside the Autumn Statement include the Terms of Reference for the Energy Bill Relief Scheme.
MAT has welcomed the Chancellor’s commitment to increase benefits with inflation and provide additional support for vulnerable households, but warned that serious challenges remain for millions of households. StepChange has reflected that many low to middle income households will also be left vulnerable to problem debt as the energy price cap increases without further Government support. PayPlan has provided their key takeaways from the Autumn Statement in the link below.
Energy cost rises and rising inflation remain very acute issues with cost-of-living increases to the fore. Inflation is now 11.1%, however, the OBR believe that inflation rate will drop to 7.4% next year. The target set for inflation is 2%.
The Energy Price Guarantee has been adapted. Since October 2022, the household using a typical amount of gas and electricity pays £2,500 a year. The chancellor said that this cap would be extended from April for a further 12 months, so the typical household would pay £3,000 a year. There is also a major focus by government, businesses and consumers on energy efficiency schemes.
After months of uncertainty, the chancellor confirmed that the state pension would go up by 10.1%, to match inflation. That will see the “new” state pension, currently worth £185.15 a week, go up to £203.85. The basic state pension, for those who reached state pension age before April 2016, is currently £141.85 a week, and will go up to £156.20. That can be topped up for those on low incomes with pension credit, which will also go up by 10.1%. The government’s review on the age at which the state pension is received, currently 66 and going up to 67, will be published early next year.
Some disability benefits, like PIP, rise by law in line with inflation each year. That happens in April, based on the previous September’s inflation figure which was 10.1%. Means-tested benefits (e.g. Universal Credit received by about 6m people) and tax credits are a decision for ministers. The chancellor said these too would go up by 10.1%.
The minimum pay rate for those aged 23 and above (i.e. the National Living Wage) will rise from £9.50 to £10.42 per hour in April, impacting about 2m people. Employers need to plan for this cost increase.
NatWest launches benefits calculator with InBest
Congratulations to Manu on another high-profile partnership.
Qualco partner with Webio
Good to see Guy and Chris in Manchester this week. They have joined forces with Webio to provide the debt collections industry with an integrated solution that can engage, automate and manage customer communications at every stage of the collections and recoveries lifecycle through their debt management platform. The solution is intended to offer a seamless omni-channel customer journey by preserving customer activity information across touchpoints in a single customer view. It is intended to empower customers to self-serve, which is topic of much debate during the Credit-Connect event and Guy featured in the panel sessions later in the day.
Guy managed to stimulate some spontaneous debate in his panel session when describing virtual/augmented reality avatars that could be collecting online in the near future. I am not sure that I would like to be discussing my personal finances with a virtual Martin Lewis, however, you are free to pick your persona of choice. In debt advice, I would probably go for someone like Melanie where you know where you stand and the need to take action now rather than wait 9 plus months whilst things get worse.
The following are all meant to be encompassed by debt-collection personalisation:
- Content of communication
- Medium of communication
- Tone of Reminders
- Analytical Insights
- Debt Repayment Proposals
- Customer Profiling and Response Effectiveness (e.g. engagement)
- Stress Management
- Dynamic/sudden changes to customer repayments
Much of this was featured in the Mixed Messages event below.
Payments & innovations
On a related topic to the one above, UK Finance has been looking at payments and innovation, which includes operational resilience and cyber-security. These are critical aspects of planning for the future as we try and co-ordinate transformation plans aligned with the Consumer Duty and the cost-of-living crisis. This is likely to be highly topical for the Risk Coalition session on Monday 21 November 2022.
UK Finance has described the payment sector as “expansive, increasingly diverse and complex, and plays a vital role in the UK economy”. They want UK customers to benefit from the most modern, resilient and safe payments systems in the world, enabling competition, innovation, choice and opportunity. They want to work with their members to harness common standards, open technology and support a culture of collaboration, in order to maintain a resilient and sustainable ecosystem that works well for everyone. The ‘value exchange’ was a key topic at Credit-Connect, especially around the adoption of open banking and open finance.
They have focused on the overarching challenges like privacy and AI ethics, cyber security and ensuring business resilience.
Fraud rises as cost-of-living and economic crises begin to deepen
Building on last week’s bulletin, Cifas figures and Fraudscape report revealed that the UK could be heading into 2023 with unprecedented levels of fraud. In the first 9 months of 2022, over 309,000 cases were recorded to the National Fraud Database, a 17% rise compared to last year. This also marks an 11% increase on pre-pandemic levels. 91% of identity fraud cases occurred via an online channel.
The sophistication of cyber enabled attacks such as phishing and smishing continues to grow, as does the quality of false documentation provided to support subsequent fraudulent applications. We referenced this in Motor Finance last week.
By way of ‘heads up’, there is a real concern that due to the rise in living costs, criminals will look to target loan products and deferred credit services and exploit those who have more relaxed criteria than others.
Mixed Messages event at FCA – 15/11/2022
On 15 November, I attended the launch event of the Mixed Messages report by StepChange Debt Charity and Amplified Global™ on a wet day at the FCA offices in Stratford. I agree with Steve Coppard that we gained some fascinating insights and that these were referenced a number of times at the Credit-Connect event by creditor panelists. I believe that it is very important that someone of the presence of Sheldon Mills keynoted this event with good representation from the FCA during and after the event, where the networking was very useful. Good to see presence from trade bodies and government agencies like Crown Commercial Services (CCS) around the Debt Resolution Services framework. Excellent chairing by Faith – pictured above with Sheldon at the podium discussing a couple of concerts he had recently attended.
The Mixed Messages report is in the public domain at the link below and DEMSA has promoted it in previous bulletins. As part of the report, StepChange Debt Charity asked their clients how the letters, phone calls and other communications from their creditors made them feel. I would suggest the graph gives us some clues around the need for more targeted communications. They asked the same question about the information they received from StepChange. Figure 1 below compares the 2 sets of different responses. Peter Tutton covered some of these points at the FCA event.
On 22 November at the GB Group event, Steve and I explore why some consumers don’t engage, where they haven’t actually ‘skipped’ or ‘gone away’. The pandemic will have taught us some lessons around consumers facing financial difficulty for the first time. The FCA Consumer Duty is demanding that we learn from these lessons for different customer segments, including those with characteristics of vulnerability.
I was pleased to see Mike Ellicock from Plain Numbers at the FCA event where he posed similar questions around numeracy, where understanding bills and arrears correspondence can be as daunting as the unintelligible language highlighted by Minesh Patel in his lived experience presentation.
Hopefully we can build on some of the key messages around better engagement and removing some of the barriers. Co-design (test & learn) came up a lot yesterday along with intelligibility. I support the StepChange messaging around ‘for people like me’ so that consumers don’t feel isolated. The consistency of messaging and re-assurance of help seem critical success factors. Hopefully, the slides will be available for circulation.
Insolvency Stats – October 2022
In England & Wales, the number of company insolvencies in October 2022 was 1,948, which is 38% higher than October 2021 (1,410) and 32% higher than the pre-pandemic figure (1,477) in October 2019. There were 82 company insolvencies registered in Scotland, 22% higher than the number in October 2021 and 1% higher than in October 2019. This was comprised of 19 compulsory liquidations, 55 CVLs and eight administrations. There were no CVAs or receivership appointments. There were 15 company insolvencies registered in Northern Ireland, this is 7% higher than in October 2021 but 71% lower than October 2019. This was comprised of 12 CVLs and three administrations. There were no compulsory liquidations, CVAs or receivership appointments.
The number of Scottish registered companies becoming insolvent or entering receivership increased in the second quarter of 2022-23, with 270 companies becoming insolvent, 28% more than the figure (211) in the same quarter of 2021-22.
There were 1,894 DROs in October 2022, 2% lower than October 2021 and 25% lower than the pre-pandemic comparison month (October 2019). There were 531 bankruptcies in England & Wales, 14% lower than in October 2021 and 62% lower than October 2019. By contrast, there were on average 7,610 IVAs per month in the 3-month period ending October 2022, which is 8% higher than the 3-month period ending October 2021 and 13% higher than 2019.
In October 2022 there were 161 individual insolvencies in Northern Ireland, 58% higher than in October 2021, but 31% lower than October 2019. This consisted of 145 IVAs, 11 DROs and five bankruptcies.
Statutory debt solutions in Scotland – Q2 2022/23
As part of the SDRP work, we have been looking at what is happening in Scotland and Yvonne covered some of this at the recent MALG conference on the SDRP panel session.
There were 2,069 personal insolvencies (bankruptcies and PTDs) in Scotland in 2022-23 Q2, 148 (7.7%) more than in the same quarter in the previous financial year (2021-22 Q2). A total of 589 bankruptcies were awarded in Q2, an increase of 11.8% when compared to the same quarter in 2021-22. PTDs increased by 6.2% to 1,480 over the same period.
With regard to Personal Insolvency Reform in England & Wales, there were a total of 529 bankruptcy awards in Q2 following applications submitted to AiB, all through the revised fee structure. Of this total, 383 (72.4%) applicants were not required to pay any fee at all.
There were 879 applications for moratoria granted in 2022-23 Q2. This is 68 (7.2%) fewer than the figure of 947 granted in the same quarter in 2021-22.
There were 1,251 DPPs under the Debt Arrangement Scheme (DAS) approved in 2022-23 Q2, compared with 1,138 approved in the same quarter of 2021-22. A total of 520 approved DPPs under the DAS were completed in 2022-23 Q2, which is a 14.8% increase on the same quarter in 2021-22. There were 405 DPPs revoked in 2022-23 Q2. This is 73 more than the figure of 332 revoked in the same quarter of 2021-22.
There were 6,342 Breathing Space registrations in October 2022, which is 31% higher than the number registered in October 2021. 6,230 were Standard breathing space registrations, which is 31% higher than in October 2021, and 112 were Mental Health breathing space registrations, which is 38% higher than the number in October 2021.
I had a useful catchup with Matt Vaughan-Wilson from the Citizens Advice policy team last Monday on their submission to the Personal Insolvency reform consultation, which can be found at the link below. Some of the pre-amble is interesting:
“In 2021/22 we helped a total of 293,231 people with debt problems. We gave advice to 25,979 people about Debt Relief Orders (DROs), 9,207 people about Bankruptcy and 5,325 people about Individual Voluntary Arrangements (IVAs). As a DRO Competent Authority, we supported 7,589 to obtain a Debt Relief Order.”
Colin has posted the 2022 Credit & Collection Technology Award Winners. Well done to everyone. Quite a few on the circulation, where Cerebreon, IE Hub and PayLink all took awards in a very well contested part of the emerging ecosystem discussed during the day. Chris Warburton did a great job chairing the event during the day and he sat next to me at the dinner where I acted as ‘critical friend’ whilst polishing off the white wine. Russell has posted that he was inspired by the entire event. I must admit, I do prefer sticking my hand up to trying to stay within the word limit on Slido. Unfortunately, I was at the back of the room couldn’t throw anything at Chris to get his attention on topics like BNPL, better engagement and the way forward regarding the pathway to debt advice.
Spotted Hattie’s post ahead of the GB Group event on Tuesday that we had a great evening on our very central table trying to avoid the gaze of the comedian. Martin O’Donnell didn’t manage that, though he came off better than British Gas. Good to meet Brett Ellis and discuss Rugby a little later in the evening. Nice to meet Andrew Bonsall and Stephen Ashworth (who were on my right) and the team from AperiData (challenger CRA), who were up for a few awards. Vanessa and I managed to solve most of the UK debt advice challenges at last post.
I had great chats with Lou Yates and Lex Jones before the dinner and hope to follow-up very soon. I spotted the RTL post on council tax and keen to find out more.
Vulnerability Summit – 21/11 at the Brewery, London
I have now had my rehearsal with Sonya and she has agreed that I mime and nod in the right places. The rehearsal featured Sonya’s dog (dog walk time) and my cat (on the back of my chair). The team promises some good lived experience and cases studies. Martin Jones is an active campaigner in this space and will raise a few practical thoughts around key actions by financial services providers and I will look at these from a consumer outcomes perspective under the Consumer Duty and data sharing remit. 25 minutes seems a short slot.
I spotted this GamCare post that Lloyds Bank customers will be able to set personalised limits on how much they spend each month on gambling using their debit card, as part of a trial.
We are covering:
- What measures can and should be put in place
- Gambling and regulation
- Gambling limits – technology available
- Responsibility of the lenders
Cost of Living and Board Risk – Transpire NED event at 12:00 on 21/11/2022
I am pleased to be supporting a panel session on the cost-of-living crisis on 21 November 2022, which has been brought forward to midday because of the football. Sam Manning has joined the panel. It was good to see Sam and Bryan at the Mixed Messages event at the FCA on 15 November 2022.
Customer Tracing: The Complete Picture – 2pm on Tuesday 22/11/2022
Hattie Fancourt, Business Development Director of GB Group, is putting together an event on 22 November 2022. A younger version of me is on the panel with Steve Coppard and Daniel Pearce. We discuss whether by cross-referencing data from different sources it is possible to build up a complete picture of financial health and reconnect with customers quickly and easily. The discussion has already started on LinkedIn.
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 as next week at the .
VRS webinar on 13/12/2022
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