General
I picked this story up on Lincolnshire Live. Tens of thousands more children are becoming eligible for free school meals, with two in five kids in some areas able to get them. A teaching union says it’s “shocking” numbers needing state-funded lunches continue to rise but warns they’re still not reaching all those who need them. Department for Education (DfE) data showed that there were 1.90m state school pupils eligible for free school meals (FSMs) in England this January 2022. This was up by around 160,000 from the 1.74m counted in 2021 and well above the 1.14m recorded in 2016, the earliest year with available figures. It would be interesting to see how many debt advice providers capture this type of information during their income & expenditure assessments.
CCR coverage of DEMSA thought piece on SDRPs
CCR magazine has covered the DEMSA thought piece on the HM Treasury Statutory Debt Repayment Plan (SDRP) consultation.
Link: https://www.ccrmagazine.com/magazine/may-2022/ – pages 36-37
My thanks to Bev Budsworth for the introduction to Rowan Duffin-Jones, secretary of the IPA’s Standards Ethics & Regulatory Liaison Committee (SERL). The IPA is setting up a Working Group to respond to the Treasury’s Consultation. Bev is on the SERL Committee.
I have also had dialogue with HM Treasury and will attend 2 workshops during the course of July 2022. The Insolvency Service haven’t yet communicated when their open event is being held that I am aware of. If any of you know differently then please advise.
The UK’s credit gap will gape in this cost-of-living crisis
My thanks to Richard Bartlett, CEO of Auden, for highlighting this FT article where they state that illegal money lending appears to be rising as higher energy and food bills push those in need towards loan sharks. This has also been something that the Illegal Money Lending Team (IMLT) have been communicating in conjunction with VRS. Richard has stated in his post that “these are the challenges that Auden and other members of Responsible Finance are wrestling with”.
The article reflects on FCA interventions in the home credit and high-cost short-term credit (HCSTC) sectors. The volume of loans in these sectors has dropped by more than 3.2m in 2021 compared with 2019 or by about £1 billion in monetary terms. What is clear is that a bit of a void has been left behind and that the regulation of BNPL is still in its infancy. Citizens Advice has published a release around the number of consumers paying off BNPL accounts using another form of credit. As ever, the challenge is identifying those where this is an affordability ‘red flag’ versus those using the system effectively and making the use of interest free credit terms intelligently.
This week saw the FCA announcement of the fines against guarantor lender, TFS Loans, which went into administration in February 2022 and is servicing existing loans. The final notice (attached) highlights the fundamental failures around affordability assessments, particularly around guarantors. TLS (in administration) were fined a discounted £811,900 by the FCA in relation to deficient affordability checks on 3,150 guarantors in its consumer credit business. The FCA has also imposed a requirement on TFS to redress the guarantors that were harmed by the firm not conducting appropriate checks.
FOS has announced that they have appointed Abby Thomas to the role of Chief Executive and Chief Ombudsman
Abby Thomas will replace Nausicaa Delfas (formerly of the FCA), who was interim CEO and Chief Ombudsman.
She currently works for Virgin Media O2, which has 42.7m mobile connections and 5.8m fixed line customers. Her roles at Virgin Media O2 have included leading Virgin Media consumer operations, with responsibility for service call centres, field force and supply chain leadership, and more recently leading their flagship B2B Transformation programme. She will take up her new role in the autumn.
As a Virgin Media client, it will be interesting to see what the lessons learned are, particularly in terms of answering the phone within an acceptable time period and being able to resolve regular internet outages, which will be key assessment measure under the new FCA Consumer Duty from April 2023.
CIVEA contributes evidence at levelling up Housing and Communities Select Committee
CIVEA gave evidence to the House of Commons Levelling Up, Housing and Communities (LUHC) Select Committee inquiry into Council Tax collection. DEMSA responded to this earlier in 2022. CIVEA is the primary trade association for civil enforcement agencies in England & Wales, representing more than 95% of the industry. They highlighted recent advances in technology and directed MPs to Cabinet Office work on data collection.
Russell Hamblin-Boone, CIVEA CEO and Paul Whyte, CIVEA President were joined by a number of witnesses. The transcript is attached.
Link: https://committees.parliament.uk/event/13780/formal-meeting-oral-evidence-session/
UK Finance – impact on mortgaged households
UK Finance analysis finds the average mortgaged household will see a 3% reduction in the amount of disposable income left over after mortgage, credit commitments and living costs.
Their latest Household Finance Review, in collaboration with Accenture, shows trends in consumer borrowing and spending in Q1 2022. Despite clouds brewing on the economic horizon, the broad aggregate picture as 2022 began was summarised as “so far, so good”.
The June 2022 economic insight highlights the impact on businesses, both in terms of their supply chains and own production costs. Some sectors are able to pass on these costs to customers and others are reluctant to do so. Overall, UK Finance is pointing to a ‘bumpy ride’ for the economy in the coming quarters.
Link: https://www.ukfinance.org.uk/news-and-insight/blog/household-finances-calm-storm-clouds-gathering
Link: https://www.ukfinance.org.uk/data-and-research/economic-insight/monthly-economic-insight-june-2022
Income maximisation in debt advice
This has become more topical in recent months. We featured last week a blog by UK Finance around Support for banking customers in financial difficulty. This highlighted that where someone has several debts across different lenders or are having trouble paying other bills, UK Finance has discussed the benefits of seeking debt advice. In addition to debt advice, they have focused on the role of income optimisation to establish entitlement to any state benefits or tax credits. We are beginning to see more creditors sign-post consumers to both services, which may be delivered by a single provider through one API call or warm transfer.
InBest has provided details of their new features for debt advisers and debt resolution firms. The post follows recent correspondence between Steve Coppard (Director of Arum/Just) and me. Steve is positioning this in the collections space as a basic hygiene level, which I support.
Link: https://inbest.ai/embedding-income-maximisation-in-debt-advice/
Vulnerability ecosystem – ‘Closing the vulnerability gaps’
Chris Jones of VCX has posted the latest version of the ‘Closing the vulnerability gaps’ document on LinkedIn. The file is fairly large, but can be downloaded from the site. The referenced technologies, tools and organisations bring together customer analysis, staff training, call centre tooling and data capture to provide personalised journeys for customers in complex circumstances that make the vulnerable.
It aligns with many of the key points on inclusive design that I will touch upon at the VRS on 14 June 2022. Many of the contributors are featured on 14th.
Natasha Bambridge, Director of the Consumer Promise Practice has posted ‘How do you test your performance in protecting Vulnerable consumers?’. Her supplemental questions are ‘What KPI’s and metrics do you think are the most important one’s for monitoring?’ and ‘For Finance, Energy & Water where essential services are provided should these be a higher bar than say retail?’. I have joined the debate in the Consumer Vulnerability Champions group.
Money 20/20 – Amsterdam
A number on the circulation have been in Amsterdam in the last week for Money 20/20. I have very fond memories of my 3 years as a resident in the city. It looks like many visited some familiar venues from the collection of photos posted on LinkedIn.
The FCA has posted the speech by Jessica Rusu, FCA Chief Data, Information and Intelligence Officer on 8 June 2022. She highlighted that the next few years will bring about significant innovation and change in financial services. As with the Sheldon Mills speech featured last week, the regulator agrees that when used correctly and responsibly, data & technology can offer new and innovative services to consumers. Sheldon discussed open banking, affordability assessments, digital debt advice and thin credit files.
As a continuation of the FCA executive messages, the FCA acknowledge the ‘Digital Revolution’ growth in FinTech, as well as new business models powered by AI. They recognise that this technology can be a force for good, but have flagged an increase in firms suffering from cyber-attacks and many consumers considering alternative forms of finance such as Crypto. She referenced a recent study that found 55% of Bitcoin holders bought it for the first-time last year. Now 1 in 5 UK residents own some form of crypto. This concerned me last week when Sheldon Mills indicated the proportion of consumers funding this using credit. At these type of levels, debt advisers should be asking whether someone has made this type of investment and whether it is a factor in their debt problem.
Link: https://www.fca.org.uk/news/speeches/innovation-regulation-partners-success-financial-services
Apple and Zopa enter BNPL market
Alongside layoffs, slashed valuations and uncertainty, new BNPLs continue to launch, from stealth startups to Apple Pay Later and now Zopa.
Apple has long been reported to be working with Goldman Sachs on a ‘pay later’ service, and the tech giant’s decision to acquire UK fintech Credit Kudos in March 2022 was also rumoured to be connected to its BNPL plans.
Zopa has also entered the BNPL space with regulated products that prioritise transparency and customer protection. This was announced at Money 20/20. The BNPL service will be offered on larger purchases (£250-£30,000) that might typically take customers months or years to save for.
The bank will roll out the offering in a staggered approach, first with BNPL retail finance for merchants through B2BC partnerships, and then to a consumer offering once new regulation has been implemented. They have said it will only offer affordable credit by running credit checks and affordability tests for all its customers and will also offer tools to help customers pay down their debt.
Link: https://www.altfi.com/article/9348_zopa-enters-the-bnpl-game
Isobel Crosse, Head of Customer Experience at TDX Group, and Andy Sacre, Director of Product at Equifax UK, have published an article entitled ‘The growth of BNPL and the importance of being FCA-ready’. I think there is a universal call for a clear timetable when this will take place, where more than 15m people in the UK have already used BNPL, already more popular than credit cards with the under 30s. The report suggests regulations by the end of 2022.
My thanks also to Karl-Magnus Wadsack, Strategic Growth Director at AccountScore, for the link to the report on the top BNPL providers.
Equifax will start to add BNPL to credit files as soon as summer 2022. This will benefit customers who use BNPL and pay their bills on time, whilst increasing fairness and transparency for customers and businesses alike. Equifax will also further develop fair and accurate credit scores and characteristics for creditors that includes BNPL data. Klarna issued an update around how it will share its data with CRAs. Equifax needs to get added to the list.
With regard to the PayLink story below, Equifax will continue to develop Open Banking services and fraud capabilities for their BNPL clients to help them grow their business, give consumers a great experience and get ready for the requirements of FCA Consumer Duty.
Link: https://www.tdxgroup.com/news/the-growth-of-bnpl-and-the-importance-of-being-fca
Trustly acquired Ecospend at the end of May 2022, further strengthening their position in the UK. The UK is one of Trustly’s core growth markets. Having set an ambitious target to be the game-changing market leader in the UK, the acquisition of Ecospend now accelerates Trustly’s journey towards that target. Ecospend was founded in 2017 as an Open Finance Technology platform. Whilst I was working at HMRC in 2021, Ecospend won one of the largest ever Open Banking contracts with HMRC. In the past year Ecospend has processed over £5 billion in transaction volume from its client portfolio which, in addition to the UK Government, includes several blue chip private sector clients such as ITV, Toolstation, Anglian Water and London Mutual Credit Union.
PayLink select Equifax as their open banking provider
There has been a number of media updates around the collaboration between PayLink and Equifax.
Both Susan Rann, CEO of PayLink, and Rachel Duffey, CEO of PayPlan, have provided insight from across their clients in recent joint events. This shows a continuation of self-employed renters falling into debt. It also flags a new demographic of consumers with a high household income struggling with their finances. PayLink has confirmed that this is the first time they’ve seen – through their Embark I&E data – an increase in consumers seeking debt help from households with incomes of £60,000 or more since the 2008 financial crisis, with 13% of consumers falling into this bracket.
Consumers with deficit budgets continue to grow. In April 2022, this accounted for 20% of consumers who completed an income & expenditure through Embark. PayPlan has also issued a blog on finding extra support with daily costs.
Link: https://www.finextra.com/pressarticle/92936/paylink-selects-equifax-as-open-banking-partner
Link: https://www.payplan.com/blog/where-to-find-extra-support-with-daily-costs/
MorganAsh integrates VRS into its core service
Another good collaboration where MorganAsh has integrated the VRS with its own MorganAsh Resilience System (MARS) tool, making vulnerability assessment easier and more reliable for firms in the Financial Services sector. MARS provides staff with a simple way to assess, understand, rate and track characteristics that contribute to the vulnerability of individual customers. The tool uses a combination of existing data and customer assessments to deliver a “resilience rating” for each consumer. It draws on a range of sources of data, including VRS.
When a new consumer is entered into the MARS tool, the system automatically checks the VRS database to see if the individual is registered and immediately displays this to the user. This prompt response ensures that staff can take action to manage the consumer appropriately and in accordance with the new requirements of the FCA Consumer Duty.
Andrew Gething is speaking at the VRS event on 14/6/2022.
Collaboration between Data on Demand and VRS
Good collaboration with Data on Demand announced ahead of the Vulnerability Registration Service event on 14/6/2022.
https://dataondemand.co.uk/blogs/an-opportunity-to-better-serve-financially-vulnerable-customers/
Data On Demand has partnered with VRS to further increase the volumes of vulnerable individuals that organisations can proactively reach.
Fraud in contact centre
Since the start of the pandemic, fraud attacks have become a common problem for banks across all customer channels, from telephone to internet banking. But for contact centres, the issue is particularly pertinent, with a recent study finding that 57% of contact centre decision makers found contact centre fraud to be on the rise.
The blog highlights how fraudsters often use the contact centre as a way to gain information or credentials that allows them to commit fraud through mobile and web channels, something which would otherwise be much more difficult to penetrate. This may be something that omni-channel providers need to consider in terms of downstream vulnerabilities where ID & V is not joined up across channels.
Link: https://www.ukfinance.org.uk/news-and-insight/blog/fraud-and-contact-centre-what-you-need-know
Events
I am attending the Salesforce event in London on 16 June 2022. I am hoping to see case studies around integration of best practices into their CRM platform.
TDX Group Insolvency Roundtable – 22/6/2022
TDX Group is joined by The Insolvency Service to offer a regulatory view, as well as PayPlan giving a debt advice update. They’ve lined up a panel of Insolvency Practitioners to discuss the future of personal insolvency.
Credit-Connect 2022 Credit & Collections Technology Awards – entries close 7 July 2022
The Vulnerability Registration Service’s next Webinar ‘The Vulnerability Jigsaw’s Next Piece: Identification, Integration & Implementation’ is on 14/6/2022 and promises to be very well attended. The agenda is now available with a plethora of speakers.
I am providing a short update on ISO 22458 (consumer vulnerability).
Collaboration Network – Vulnerability Summit – 21/7/2022
Some familiar names are speaking at the event, with Chris Fitch as keynote and a case study between the Vulnerability Registration Service (VRS) and Data on Demand. There is an interactive workshop built around supporting customers in financial hardship delivered by Helen Pettifer.
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