DEMSA update: Personal insolvency / Economic Abuse Toolkit / Consumer Duty / Training / Events

Starting on a positive note, Bank of England Governor Andrew Bailey has stated that inflation is likely to fall rapidly during 2023 as energy prices fall. The pace of price rises in the UK has been slowing slightly, standing at 10.5% in the year to December 2022. Food prices, however, remain high. Markets predict interest rates will peak at 4.5% and the Bank is not steering them away from that figure. Financial markets now expect the Bank to raise its main interest rate to 4% from 3.5% on 2 February 2023. For consumers, these messages seldom provide clarity and it still feels like costs are going up on all fronts apart from fuel. We need to keep a close eye on what is going on with the US economy. The US has hit its debt limit, with their Treasury Department now taking measures to prevent a potentially devastating default.

Chris Warburton has just posted a comparison on UK attitudes to risk versus the US – – definite Saturday afternoon reading.   

4most has also produced a Credit Risk market update. We hope to hear from 4most at the Credit Union and Community Banking event on 7 February and their economic forecasts.

Energy prices still going up

According to the BBC report, about 2.5m UK households have seen their annual energy bill go up by an average of £116 despite the government fixing prices until April 2023. Those on Economy 7 electricity tariffs, who pay different night-time and day-time rates, saw a 7.6% rise this year. Suppliers of this tariff can set their own rates and were allowed to increase them on 1 January 2023. The analysis, by energy consultancy Future Energy Associates, found there has been an average annual rise of 7.6%, meaning Economy 7 users are now paying on average 46% more than others on electricity-only tariffs. The consultancy says a typical Economy 7 annual bill is now £2,964, far higher than the government’s figure of £2,500.

British Gas has said it will stop switching people onto prepayment meters via their smart meters when they struggle to pay their bills. This comes amid growing calls to stop the practice, which critics say puts vulnerable people at risk. Citizens Advice said forcible switching should be banned, adding it had seen a big rise in clients needing crisis support such as emergency grants. They have committed £10m of extra support for customers in need, which could include non-repayable credit of up to £250 for those struggling the most to top-up their meter. In 2022, an estimated 600,000 people have been switched to prepay, according to Citizens Advice, either by their supplier physically installing a meter in their home, or automatically having their smart meter switched to prepay mode. Citizens Advice published a powerful release on 12 January 2023 around prepayment meters being cut off.


Building on the MaPS release last week, new analysis from Citizens Advice has found a record number of people were in need of crisis support during 2022, as the cost-of-living crisis pushed more people than ever before to breaking point. The new research found that in the last 12 months, the charity helped more than 200,000 people with crisis support – which includes food bank referrals and emergency charitable grants. That’s 48% higher than 2021. Of this group, more than three quarters (152,982) were people who had never needed this type of help from Citizens Advice before.


Centre for Social Justice debt adviser survey

I spotted this call to action from Stop Loan Sharks England, who are supporting the Credit Union and Community Lending event on 7/2/2023. Several on the circulation may be able to help.

Cyber resilience

I have seen a few Cyber Essentials and ISO 27001 renewals come through. Congratulations to Dominic Maxwell at TellJO on his Cyber Essentials Plus renewal. Congratulation to Gillian and Ken on Cerebreon getting re-certified for ISO 27001.

See also  DEMSA update: StepChange is 30 / Data Privacy Day / Consumer Duty / ISO 22458 / AI use by local authorities / Events

Vulnerability segmentation by Fair4All Finance

We are pleased to have Fair4All Finance supporting the Credit Union and Community Banking event on 7 February 2023. Research from Fair4All Finance, Trajectory and CACI estimates there are 17.5m people who are in financially vulnerable circumstances with a spectrum of those who are precarious to those who are fully excluded. 

Earlier in January 2023, Fair4All Finance responded to the PRA on Credit Union regulation. Overall, they are supportive of the proposals as a way to increase the resilience of the Credit Union sector where changes place higher expectations on larger credit unions and those making use of new or more complex products. They will also extend the range of products Credit Unions can invest in, which we believe will support growth.




Interesting Verity Centre and VCX piece on Vulnerability

I picked up on this post from Marianne last week. Interesting read. The Verity Centre is working closely with Chris Jones of VCX, who are undertaking amazing work on integrating vulnerability tools in contact centres and other engagement platforms. I also picked up on Carolyn Delehanty’s post around Helen’s new vulnerability pack that we featured in an earlier bulletin.

The impact of vulnerability on frontline staff is becoming increasingly topical. Caroline Thomas from FourNet and Marianne picked up on the challenges for contact centre agents on one of my recent horizon scan posts.


Personal insolvency statistics – December 2022

In England & Wales, there were an average of 7,233 IVAs in Q4 2022. The 2022 full year stats are available on 31/1/2023. December 2022 (5,963) saw a big dip from October (8,087), which may be down to the time of year and some consolidation going on with volume providers.

Quarterly volumes are still higher than Q4 2021 and 26% higher than Q4 2019 (pre-pandemic). The peak was 11,569 in May 2020.

There were 1,979 DROs in December 2022, which was 6% higher than December 2021, but 5% lower than the pre-pandemic comparison month (December 2019). By comparison, 397 bankruptcies were registered, which was 13% lower than in December 2021 and 64% lower than December 2019.

The new SIP 3 requirements come into force in March 2023. Whether this influences the number of DRO recommendations relative to IVAs remains to be seen. They key is the quality of debt advice that precedes the SIP 3 call.

In December 2022 there were 123 individual insolvencies in Northern Ireland, 52% higher than in December 2021, and 12% lower than December 2019. This consisted of 109 IVAs, 7 DROs and 7 bankruptcies.

Breathing space

December 2022 (4,803) witnessed a dramatic fall (1,993 cases) in breathing space applications compared to November 2022 (6,796). However, this is 14% higher than the number in December 2021 (4,196), but the gap (667) with November 2021 (4,863) was smaller.


Personal insolvency in Scotland

The AiB will publish Q3 2022/23 figures next week.

This continues the slightly upward trend in PTDs and DAS/DPP, both year-on-year and relative to Q1 2022/23.

Economic Abuse Toolkit

As covered last week, DEMSA is pleased to say that it has joined the Fairness Group and supports the use of the Economic Abuse Toolkit.

Minister for the Cabinet Office Jeremy Quin visited Money Advice Plus to launch the toolkit. They represent a new set of guidelines which will equip government staff with the tools to identify and support victims of economic abuse. This economic abuse toolkit was produced by the Fairness Group to help public sector bodies who are recovering debt. Economic abuse involves behaviours that interfere with an individual’s ability to acquire, use and maintain economic resources such as money, transportation and utilities. It can be controlling or coercive.

The following helped shape this toolkit to make it effective across the public sector: Cabinet Office Government Debt Management Function, CAP, Citizens Advice, CSA, CCS, DWP, HMRC, Home Office, MoJ, StepChange and the London Borough of Barking and Dagenham. Specialist charity Surviving Economic Abuse (SEA) also contributed to the toolkit. They registered an 85% increase in traffic to their website during the pandemic.

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The Economic Abuse Toolkit is made up of clear guidance which can be used by frontline staff, across departments including HMRC and DWP, to help them identify and support vulnerable individuals who are suffering from economic abuse.

This is also relevant for both debt advice providers and debt collectors supporting the public sector and more generally. Worth a read of the link below. The press release below from Cabinet Office, Sarah Dines MP, and The Rt Hon Jeremy Quin MP, suggests that around 16% of adults are estimated to have experienced economic abuse. No doubt this will become a requirement for private sector firms tendering for public sector work or through the various frameworks (e.g. CCS Debt Resolution Services framework).




Consumer Duty countdown

UK Finance has published a blog entitled ‘CONSUMER DUTY: TIME IS TICKING FOR THE DEADLINE’. They have commented that quite a few firms are struggling to turn this outcomes-based rhetoric into action through a clear implementation plan. Beyond taking a risk-based approach to prioritising implementation of the Duty, UK Finance support the DEMSA position of applying a proportionality and reasonability test, especially when considering the nature of the products or services that are offered and the impact on the consumer (e.g., complex product/service versus simple products which are less likely to harm consumers). Key is understanding your target market for each product/service and consumer characteristics (i.e.  vulnerable vs sophisticated). The debt sector is likely to have a very high proportion of financial vulnerable customers.

They have referenced firms who have received actionable feedback from the FCA needing time to readjust their plan before they start putting in the groundwork. Larger firms are likely to have had requests from the FCA to have sight of their Duty implementation plans and that is likely to be true of several on the circulation. This is also true if you are undertaking any changes of permissions or changes in control. The FCA has clarified requirements around variations of permissions and new applications.

More supervisory guidance is expected from the regulator which is likely to highlight key areas of focus/specific data points for each portfolio of firms.


Requirements for Firms Seeking Authorisation: The FCA highlights that from February 2023 all firms applying for authorisation will have to demonstrate that they comply with the Duty, and firms seeking to vary their permissions will be requested to provide a copy of their implementation plan and additional evidence that supports it.



The UK Finance blog on building innovative partnerships may also be of interest to many FinTechs on the circulation. Innovation is one of the hardest things to get right, and it can be especially difficult for the larger financial firms, which are often less flexible and nimble than start-ups or SMEs. Many have difficulty in obtaining senior approval to move these ideas forward. This will sound very familiar to many in their tendering processes. 35% said the main barrier to automation is the lack of buy-in from the boardroom.

Banks want partners to be highly flexibility (29% – probably elastic) and very robust (20%). Compliance issues can also be a barrier to creativity, as was the case for 34% of respondents.



I love positive testimonials when it involves me. We are continuing the Consumer Duty training from 30 January 2023 over a number of scheduled dates over the next quarter. Kirstie and Heidi are organising and are copied if you are interested. I am looking forward to supporting this Vulnerability Registration Service (VRS) training & development event and to see how far we have come since the training in October 2022 when implementation plans were due to be submitted to the FCA and ‘Duty champions’ appointed. The FCA has since been providing regular updates on their expectations at a sector level, most recently to general insurers for customers in financial difficulty.

See also  DEMSA update: Cost-of-Living / Consumer Duty / Identity management / ESG / Cyber-security / Vulnerability / Events

We also have the first cohort of firms in the Financial Services sector coming out of the BSI ISO 22458 (consumer vulnerability) accreditation process. I am aware that there will be a number from the Financial Services, Water and Energy sectors.

The FCA has been requesting Duty plans, especially where they are part of a change in control or other FCA register variations. This training may also be relevant to insolvency practitioners subject to SIP 3 changes in March 2023. The October 2022 events included debt advice providers, DCAs, debt buyers, challenger banks, insurers and other consumer credit firms. We already have challenger banks and retail creditors registered for the next one.

Please choose one date from the list below (all £195/person/session or £150/person/session when booking for more than one person from the same organisation):

  • 30 January 2023, 1.30-4.30pm
  • 20 February 2023, 1.30-4.30pm
  • 27 February 2023, 1.30-4.30pm
  • 13 March 2023, 1.30-4.30pm
  • 20 March 2023, 1.30-4.30pm



We have obviously plugged the Credit Union and Community Banking event on 7/2/2023. Manu from InBest, IE Hub, Stop Loan Sharks England, VRS and others are now promoting. The DEMSA LinkedIn post is gathering some traction. We are encouraging participation from the debt advice sector and I had a good discussion with Vanessa Northam and Peter Tutton yesterday. I am sure deficit budgets will feature on the agenda and Gareth McNab has also confirmed that CAP is currently witnessing 50% deficit budgets, where the average deficit is £250. This aligns with the feedback from Citizens Advice and National Debtline. We featured the StepChange November 2022 stats where their figure is closer to 33%.

There seems to be strong support from the preliminary survey results around data sharing of I & E data and the use of consistent tools to achieve this.

Stop Loan Sharks England have a couple of events for Credit Unions and Community Banks on 23rd and 27th of January 2023.  


VRS – Local Authority event on 13/2/2023

On the theme of data sharing amongst local authorities, this important event will feature several case studies, including Kent.

There has been good pick-up by CCR on the VRS ‘Vulnerable Customer Exclusion Report 2022’ report.



The Vulnerable Customer Exclusion Report 2022 can be downloaded at the link above. In terms of 2023, Helen has made the following statement:

“This report is an urgent call for action to address the vulnerability emergency that is sweeping the UK. There are clear steps organisations can easily take right now to alleviate the difficulties for so many of their customers. The Vulnerability Registration Service is an extremely powerful starting point for all service providers and the only database that flags known vulnerabilities. By not being proactive in understanding who among their customers is vulnerable right now, they are effectively excluding them from getting the support they need and actively causing them greater harm.”

Event link:

Online Collections Technology Think Tank 4.1 – Thursday 23/2/2023


Credit Strategy Credit Summit 2023 – 16/3/2023

I have been asked to speak around Collections Strategies and will be doing further research with Chris Warburton in the coming weeks. Same venue as last year at the QEII Centre, London. Last year, I chaired and spoke in the Open Banking strand. Roma Pearson is speaking from the FCA. I am on with Sam Challenger, Head of Collections & Customer Experience at Billing Finance.



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