DEMSA update: Volume IVA report / FCA strategy / ISO 22458 launch / StepChange Yearbook / ICO consultation / Events

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From the desk of Kevin Still

General update

Consumer confidence continues to fall as a sequence of ‘bad news’ stories hit consumers and small business, in many instances directly in their pocket and disruption in everyday lives. Rishi Sunak’s wife having to pay UK tax on overseas income may mitigate this. This threatens to be another political sideshow.

There appear to be an increasing number of trials of 4-day working weeks.  UK Finance recently reported that over 3,000 employees at 60 companies across the UK will trial a 4-day working week from June to December 2022, in what is thought to be the world’s biggest pilot scheme.

Something that has been topical in Social Value responses to government tenders is the gender pay gap and looking at continuous improvement in this area. I think we all recognise that there remains a gender pay gap in the UK, especially in some male dominated sectors like construction. The latest disclosures made by large companies, charities and government bodies showed that the median pay gap reduced slightly from 10% to 9.8%.

NI contribution changes have now taken effect and this has received coverage this week as part of the general reduction in surplus income theme.

A new TransUnion report has shown that the proportion of people regularly checking their credit score has increased by 30% since the pandemic began. Six in 10 UK consumers say that the cost-of-living crisis will make it harder for them to obtain credit, however, demand has increased post-pandemic, with 22% looking to apply for a credit card in 2022, up from 13% in 2019. 37% of UK adults now use BNPL at least some of the time when shopping. Awareness of Open Banking was healthy, with 68% of consumers saying they have heard of it when given a definition. Of those who have used Open Banking in the past, 93% would be likely to use it again in future. The full report can be downloaded from the link below.

Link: https://newsroom.transunion.co.uk/credit-score-checking-on-the-rise-as-consumers-tackle-cost-of-living-crisis/

On another ESG note, more electric cars were sold in March 2022 than in the whole of 2019, with electric cars accounting for 16% of new car sales. 50% of all new cars must be fully electric-powered by 2028 under new government plans to accelerate the shift away from petrol and diesel vehicles. I have diarised this for 31/12/2027.

The average price of a house has increased by 11% over the past year to a new record figure of £282,753. The Halifax House Price Index showed that prices have increased 1.4% since last month and around £28,113 in just 12 months.

Link: https://www.bbc.co.uk/news/business-61024311 – house prices

I am reviewing my Christmas card list after first class stamps went up to 95p.

Meeting concerns over affordability checks in BNPL loans, the UK’s Zilch has partnered with Experian to begin reciprocal reporting of credit data. Zilch says its current blend of CRA data, Open Banking data and its own proprietary behavioural data creates a 360 degree view of a customer’s affordability at any given time.

Link: https://www.finextra.com/newsarticle/40028/zilch-updates-bnpl-affordability-criteria-with-experian?utm_medium=newsflash&utm_source=2022-4-7&member=143049

FCA 3-year strategy and Business Plan for 2022/23

The FCA has published its strategy for 2022 to 2025 and its approach to being a more innovative, more assertive and more adaptive regulator. The FCA regulatory round-up has stressed that the new Consumer Duty (Policy expected July 2022) reinforces the requirement to be outcome-focused. This includes measuring the true impact that products & services have on your customers. This is important with BNPL coming under the FCA remit. According to the FCA, firms showing leadership and doing the right thing should welcome action to tackle non-compliant businesses.

The strategy confirms the increased focus on ESG policy and strategy where finance will play a key role in the transition to net zero by promoting transparency and building trust and integrity in ESG-labelled products.

Nikhil Rathi, CEO, has reinforced the outcomes-based approach to guard against inconsistent regulation. The increased cost of living, with consumers more exposed to risk and more reliant on financial services, has focused the FCA approach to supervision. This includes targeting firms with inadequate ‘harm-prevention controls’. The executive summary confirms that 200 new staff have joined the FCA so far this year.

The FCA has also published a page entitled ‘outcomes and metrics’, which starts to put meat on the bones of FCA expectations around outcomes and metrics arising from the implementation of the Consumer Duty in April 2023.

Under ‘Consumer topline outcomes and metrics’:

  • Fair Value: Consumers receive fair prices and quality
  • Suitability & treatment: Consumers are sold suitable products and services and receive good treatment
  • Confidence:  Consumers have strong confidence and levels of participation in markets, in particular through (1) minimised harm when firms fail and (2) minimised financial crime
  • Access: Diverse consumer needs are met through (1) high operational resilience and (2) low exclusion

The 2022/23 Business Plan sets out the 13 core commitments for the next 3 years. 

Link: https://www.fca.org.uk/publication/corporate/our-strategy-2022-25.pdf

Link: https://www.fca.org.uk/data/fca-outcomes-metrics#mapping

StepChange Yearbook 2021

Following on closely from their 4-year strategic outlook, StepChange has published their yearbook for 2021. In 2021, they were contacted by 483,247 new clients seeking debt advice or guidance with ‘problem debt’. Their website received 5.9m. StepChange completed full debt advice online to 105,977 clients and by telephone to 65,255 clients. In the last DEMSA bulletin, I promoted the 4-year plan. I have extracted their roadmap, including the focus on ESG and Vulnerability. This also features the rise in debt advice sessions over time. It also recognises key regulatory milestones (e.g. Consumer Duty, SDRPs) and the MaPS debt advice commissioning to the new award timetable.

Ahead of the new energy costs rises, the proportion of StepChange clients behind on energy bills remained substantially higher than before the pandemic. Additionally, the average electricity arrears debt per client increased by £150 between 2020 and 2021. 28% of clients at the time of advice were in arrears on their electricity bill, and 23% on their gas bill.

Richard Lane, director of external affairs at StepChange, said:

“With arrears on priority bills becoming more common, 2022 is going to be a tough year for many, and not just because of energy prices. We can see that the financial impact of the Covid pandemic was still being felt among many of our clients last year, and this is now being exacerbated by cost-of-living pressures. If things go on as they are, we could see the proportion of our clients who have a negative budget rise from around a quarter to more like a half.”

In 2021, 56% of all new clients were in a vulnerable situation at the time of advice. This has increased over recent years. The most common forms were:

  • Depression (13%)
  • Stress or anxiety (13%)
  • Physical disability (7%)
  • Suicidal tendencies (6%)
  • Domestic violence (5%)

Poor mental health remains closely associated with debt problems and 39% of all new clients were experiencing some form of impaired mental health at the time of advice.

Link: https://www.stepchange.org/media-centre/press-releases/2021-client-statistics.aspx

Debt advice can be life-changing, but advisers can’t work miracles

I picked up on this PFRC Blog by Sharon Collard and some work she has been doing with Jamie Evans. DEMSA has collaborated with Sharon, Jamie, Chris Fitch and Colin Trend in previous research activity.  

“Despite all the positive help that debt advice agencies provide, there are limits to what can be achieved for people in serious difficulties who have little or no spare income to pay back what they owe and for whom bankruptcy or debt relief fees may be prohibitive. In some cases, debt advisers may be able to do no more than confirm there is no real tangible help available or any recourse to additional financial support. This points to the need for wider reforms outside the debt advice sector such as adequate state safety nets, real living wages and better access to debt relief.”

Dealing with deficit budgets is likely to become increasingly common, including customers with tangible assets.

Link: https://www.linkedin.com/posts/sharon-collard-18415227_debt-advice-can-be-life-changing-but-advisers-activity-6916727734958235648-GCs6?utm_source=linkedin_share&utm_medium=member_desktop_web

Link: https://pfrc.blogs.bristol.ac.uk/2022/04/04/debt-advice-can-be-life-changing-but-advisers-cant-work-miracles/

IVA volume provider report by IPA

The ‘Volume Provider Regulation Scheme – 2021 Benchmark Report’ has been produced by Dave Holland, Chief Inspector at the IPA. Dave and I have regular catchups on emerging events like the SDRP consultation, FCA Debt Packagers consultation, AML and insolvency reform.

Launched by the IPA, the Volume Provider Regulation (VPR) Scheme came into effect on 1 January 2019. The VPR Scheme was rolled out in response to working practices in the IVA market, which continued to feature in the Woolard report in February 2021 and recent consultation around insolvency reform. In July 2019, the Scheme was extended to cover Scottish Protected Trust Deeds (PTDs) administered at volume.

The Scheme has continued to grow in its third year, welcoming both new IVA and PTD provider members Harper McDermott, StepChange Voluntary Arrangements and The IVA Advisor. During 2021 the Scheme covered 68% of the IVA market and 79% of the PTD market. The Scheme market coverage is expected to increase further during 2022 with new members joining.

See also  Credit & Collections Technology Think Tank 2021 Session 2

The IPA have campaigned for an audit of the commercial landscape in the IVA market, the introduction of new regulatory powers to regulate firms and a review of debt management products in their entirety. As a consequence, the IPA welcome the Insolvency Service’s review of the personal insolvency landscape which was announced in September 2021 as part of their 5-year strategy.

As featured in recent DEMSA bulletins with input from StepChange and Cerebreon, the IPA Scheme has continued its focus of reviewing case failures during 2021, as we all know this remains an area of concern. 5.74% of IVAs failed across Scheme members during 2021, which is a noteworthy improvement on the 8.4% sector statistic relating to failures released by The Insolvency Service for 2019. As with the 2020 review into failures, the 2021 review identified that there are no particular reasons or trends for the failure of an IVA/PTD. The full detail on the failure review can be found in Chapter 8 of this report.

Chapter 9 focuses on the reasons why individuals choose an IVA over other debt solutions in response to concerns raised by The Insolvency Service and the FCA (e.g. arising from the Debt Packager consultation).

The IPA has entered into discussions around the cost-of-living crisis with The Insolvency Service, the IVA Standing Committee and the Accountant in Bankruptcy. This is designed to ensure that the insolvency profession responds to this changing environment in a positive and proactive way to help people at a time when help is most needed. Dave has reflected around the IVA Protocol that it allows for Supervisors to have discretion to vary repayments by 15%. This level has worked well during recent times when inflation rates have remained stable, but in the current climate expectations should be reviewed. This will allow IVA Supervisors more discretion for reductions in payments and still ensure that clients can successfully complete their IVA, without it being necessary to seek further creditor approval to agree increases of expenditure outside of the original limits.

There are a number of Scheme members on the circulation list. Worth a read for the wider audience.

Link: https://insolvency-practitioners.org.uk/wp-content/uploads/2022/04/IPA-Future-of-Insolvency-Regulation-Consultation-Response.pdf

Link: https://insolvency-practitioners.org.uk/wp-content/uploads/2022/04/VPR-Benchmark-Report-2021.pdf

Link: https://www.gov.uk/government/consultations/the-future-of-insolvency-regulation

How to complete and submit the Debt Relief Order (DRO) application form

I noticed that this had been published on The Insolvency Service website on 7/4/2022. This includes the evidence required to support the application with a DRO intermediary. Given the Boris story above, it references assets (Note: Wimbledon trophies buried in the cellar are missing from the examples provided on the site).   

Link: https://www.gov.uk/guidance/how-to-complete-and-submit-the-debt-relief-order-dro-application-form

Note that the 1 April 2022 the DRO guidance for debt advisers has been updated. Additional entries to guidance on:

  • Avon representatives
  • Backdated PIP
  • Catalogue accounts
  • Child savings accounts
  • Child support from EU countries
  • Employee share schemes
  • Funeral costs
  • Guarantors
  • Highland titles
  • Joint bank accounts
  • Lien over immigration documents
  • Private number plates
  • Refugee interrogation loans
  • Removal costs
  • Rent arrears
  • Risk of violence from creditors
  • Save as you earn schemes
  • Sending money abroad
  • Timeshares
  • Debts for drugs
  • Illegal money lending
  • Join water debts

I am not sure whether the ‘risk of violence from creditors’ relates to loan sharks, where there is a reference to illegal money lending as well.

Link: https://www.gov.uk/guidance/debt-relief-orders-guidance-for-debt-advisers#full-publication-update-history

ICO call for views: Anonymisation, pseudonymisation and privacy enhancing technologies guidance

Accountability and governance

The latest ICO post on LinkedIn may be relevant to those in the AI/ML space using annonymised data to build algorithms. It has certainly come up in several meetings and workshops that I have been involved in over the last fortnight.

Link: https://www.linkedin.com/posts/information-commissioner%27s-office_focus-on-accountability-and-governance-activity-6916670875140268032-R2km?utm_source=linkedin_share&utm_medium=member_desktop_web

Link: https://ico.org.uk/about-the-ico/ico-and-stakeholder-consultations/ico-call-for-views-anonymisation-pseudonymisation-and-privacy-enhancing-technologies-guidance/

Events

CCTA conference – 26-27 April 2022

I am speaking to Julian Graham-Rack, CEO of PrinSIX, on Monday before his session at the CCTA later in April. A number of the circulation will be attending, including the Vulnerability Registration Service (VRS). Topics on the CCTA agenda include the FCA’s new Consumer Duty, affordability and vulnerability. They will also explore developments in technology and how customer engagement continues to evolve.    

Lending Technology Think Tank review

My thanks to Chris Warburton for bringing this to my attention and the results from some of the polls run, including the poll around Open Banking adoption where 45% of respondents said that they had already implemented it. In terms of information that lenders need to enable better risk-based decisions, 83% felt that this should be real-time. There was also room for improvement in the RegTech used by regulated firms. Lantern and Perch are sponsoring. Alongside VRS, Data on Demand are exhibiting (assuming Simon is fit enough).  

Link: https://www.credit-connect.co.uk/news/lending-technology-think-tank-2-1-review/

ISO 22458 – Consumer Vulnerability kitemark – launch on 5 May 2022

DEMSA has registered for the launch of ISO 22458 at a venue that will be familiar to MALG veterans. It starts at 9:30 on 5 May 2022 at the Royal College of Surgeons.

This session introduces ISO 22458 ‘Consumer vulnerability’, which builds on BS 18477. Since its publication, BS 18477 has been widely referenced by UK regulators and used by firms in regulated essential services (e.g. financial services, water and energy). ISO 22458 covers the design and delivery of inclusive services, helping firms deliver fair, flexible and inclusive services in line with the FCA Consumer Duty. This event will set out the key principles and objectives of ISO 22458 Consumer vulnerability.

At the launch event, a panel of UK and International leaders from business, regulators and consumer organisations will explore how ISO 22458 has the potential to:

  • Embed inclusive service principles throughout an organization, from senior management to frontline staff
  • Improve understanding of vulnerability and the impact it has on consumers’ lives 
  • Help service providers to implement best practice in identifying and supporting consumers in vulnerable situations
  • Help service providers to deliver a fair, flexible and inclusive approach based on real lived experiences
  • Improve positive outcomes and minimise harm for vulnerable consumers

A number on the circulation have already had initial discussions with Jo and Kiren from BSI. I have copied them on this email if you wish to follow up directly. I am trying to entice a few more to join me in London on 5 May 2022. The launch precedes BSI Consumer Forum Conference 2022 (starting at 11am).   

Link: https://www.bsigroup.com/en-GB/our-services/events/bsi-consumer-forum-conference-2022-bsi-launch-event-iso-22458/

Net Zero Week 2022 – webinars between 25/4 to 28/4

My thanks to Jo for promoting Net Zero Week 2022 as part of our growing focus on ESG at all levels. Not to be confused with the UK’s National Awareness Week 2-8 July 2022.

There is a webinar on 25/4/2022 on ‘How standards for sustainable finance can accelerate the net zero transition’.

In terms of when this begins to hit smaller firms, the message that SMEs are responsible for half of the UK’s Greenhouse Gas emissions is likely to raise a few eyebrows. I have downloaded the ‘Little Book of Net Zero’ on the BSI site.

Link: https://www.bsigroup.com/en-GB/our-services/events/webinars/2022/net-zero-week/?utm_source=linkedIn&utm_medium=social&utm_content=gaggleamp&utm_campaign=SM-STAN-BEV-ENVI-NetZeroWeek-2204

Link: https://www.bsigroup.com/en-GB/topics/sustainable-resilience/net-zero/the-little-book-of-net-zero/?utm_source=LinkedIn&utm_medium=Pardot&utm_campaign=NSB-SOCIAL-2022

Link: https://netzeroweek.com/#/

Vulnerability Summit – 5/10/2022

I have a call with Kitty Wood, Credit Strategy, on Monday to see if we can encourage more participations from the debt advice sector and specialist support providers, as prices for the event are high.

Link: https://www.vulnerabilitysummit.co.uk/

Have a good weekend.

Regards

Kevin Still MCICM

M: 07980 859994

DEMSA LinkedIn site at https://www.linkedin.com/company/debt-managers-standards-association-limited/

Good afternoon everyone

The weekend before Easter and the roads are meant to be quieter with the schools off. I didn’t see any evidence of this yesterday, where there was road chaos everywhere near me because of a range of accidents, including the aftermath of the A1 closure. More generally, long delays and queues are expected to continue this weekend as holiday-makers try to get away for the Easter break. Airlines have cancelled more than 100 flights a day due to staff shortages and ferry operators are struggling to meet demand after P&O suspended services. Have I got you in the Easter holiday mood yet?

Local elections are coming up in Lincoln with car parking and fly tipping on the manifesto. ‘Pot hole’ repairs need to be added as part of the ‘levelling up’ agenda, especially if they want to encourage more cycling, which is also on the Green party manifesto. Asda offers the cheapest fuel in Lincoln, although I saw no signs of reduced costs on my trip down the M1 last week with unleaded at well over £1.80 a litre. ‘Levelling up’ has hit Lincoln and we can see what we are getting for our money, including a cleaner Cathedral and a new single carriageway eastern bypass.

Link: https://www.lincolnshirelive.co.uk/special-features/levelling-up-what-what-mean-6785671?int_source=mantis_rec&int_medium=web&int_campaign=more_like_this   

The Grand National is later today. I am just looking for a suitable horse name that aligns with my mood – ‘Lost in Translation’ may best reflect the discussions I have with my adult kids when they can be bothered to respond. England ladies take on Wales in the Women’s 6-nations today, having had excellent results so far against Scotland and Italy. The side have won their last 20 Tests, a run dating back to a defeat by New Zealand in July 2019. They are looking to better their own record of 23 wins in a row. Some of the English cricket players in the IPL seem to be stepping up, notably Liam Livingstone and Jos Buttler. Good game last night with 2 sixes required off the last 2 balls to win and achieved. Livingstone scored 64 on the losing side. Bairstow (good run out from wicket keeper) is also in the Punjab team. I am monitoring the F1 and Golf Masters from afar. I am not sure whether Boris Becker’s bankruptcy news counts as Tennis news.

See also  DEMSA update: SDRPs / insolvency stats / cyber-security / credit unions /vulnerability / events

Link: https://www.gov.uk/government/news/boris-becker-convicted-of-bankruptcy-offences  

Breaking news – Simon Gregory retires from Marathon running

I have put this in the Sports section. Well done to Simon for completing Manchester Marathon, raising money for the worthy DEC Ukraine Humanitarian Appeal. In a public comment on LinkedIn (below), he has officially retired. That may be the lactic acid talking.   

No alternative text description for this image

Link: https://www.linkedin.com/posts/simon-gregory-84236114_im-posting-this-from-bed-ive-tried-to-activity-6916646123541520384-KvAK?utm_source=linkedin_share&utm_medium=member_desktop_web – with Just Giving link

Next up is Natasha and National Walking Week in May. Dora the dog seems to have been cloned below. Partner, Mike, on the left. A number of the Still clan will be physically supporting, including me this year. The Walking Women (with a few men supporting) are doing a dedicated walking weekend from 6-8 May around Worsley near Manchester if anyone fancies joining them. They encountered a naked jogger last year, who is not in the prospectus!

No alternative text description for this image

Link: https://www.eventbrite.co.uk/e/miles-for-may-tickets-309389551477  

In today’s bulletin

  • General update
  • FCA 3-year strategy
  • StepChange Yearbook 2021
  • PFRC Blog on debt advice
  • Volume IVA provider report by Dave Holland, Chief IPA Inspector
  • How to complete a DRO form
  • ICO call for views: Anonymisation, pseudonymisation and privacy enhancing technologies guidance
  • Events

General update

Consumer confidence continues to fall as a sequence of ‘bad news’ stories hit consumers and small business, in many instances directly in their pocket and disruption in everyday lives. Rishi Sunak’s wife having to pay UK tax on overseas income may mitigate this. This threatens to be another political sideshow.

There appear to be an increasing number of trials of 4-day working weeks.  UK Finance recently reported that over 3,000 employees at 60 companies across the UK will trial a 4-day working week from June to December 2022, in what is thought to be the world’s biggest pilot scheme.

Something that has been topical in Social Value responses to government tenders is the gender pay gap and looking at continuous improvement in this area. I think we all recognise that there remains a gender pay gap in the UK, especially in some male dominated sectors like construction. The latest disclosures made by large companies, charities and government bodies showed that the median pay gap reduced slightly from 10% to 9.8%.

NI contribution changes have now taken effect and this has received coverage this week as part of the general reduction in surplus income theme.

A new TransUnion report has shown that the proportion of people regularly checking their credit score has increased by 30% since the pandemic began. Six in 10 UK consumers say that the cost-of-living crisis will make it harder for them to obtain credit, however, demand has increased post-pandemic, with 22% looking to apply for a credit card in 2022, up from 13% in 2019. 37% of UK adults now use BNPL at least some of the time when shopping. Awareness of Open Banking was healthy, with 68% of consumers saying they have heard of it when given a definition. Of those who have used Open Banking in the past, 93% would be likely to use it again in future. The full report can be downloaded from the link below.

Link: https://newsroom.transunion.co.uk/credit-score-checking-on-the-rise-as-consumers-tackle-cost-of-living-crisis/

On another ESG note, more electric cars were sold in March 2022 than in the whole of 2019, with electric cars accounting for 16% of new car sales. 50% of all new cars must be fully electric-powered by 2028 under new government plans to accelerate the shift away from petrol and diesel vehicles. I have diarised this for 31/12/2027.

The average price of a house has increased by 11% over the past year to a new record figure of £282,753. The Halifax House Price Index showed that prices have increased 1.4% since last month and around £28,113 in just 12 months.

Link: https://www.bbc.co.uk/news/business-61024311 – house prices

I am reviewing my Christmas card list after first class stamps went up to 95p.

Meeting concerns over affordability checks in BNPL loans, the UK’s Zilch has partnered with Experian to begin reciprocal reporting of credit data. Zilch says its current blend of CRA data, Open Banking data and its own proprietary behavioural data creates a 360 degree view of a customer’s affordability at any given time.

Link: https://www.finextra.com/newsarticle/40028/zilch-updates-bnpl-affordability-criteria-with-experian?utm_medium=newsflash&utm_source=2022-4-7&member=143049

FCA 3-year strategy and Business Plan for 2022/23

The FCA has published its strategy for 2022 to 2025 and its approach to being a more innovative, more assertive and more adaptive regulator. The FCA regulatory round-up has stressed that the new Consumer Duty (Policy expected July 2022) reinforces the requirement to be outcome-focused. This includes measuring the true impact that products & services have on your customers. This is important with BNPL coming under the FCA remit. According to the FCA, firms showing leadership and doing the right thing should welcome action to tackle non-compliant businesses.

The strategy confirms the increased focus on ESG policy and strategy where finance will play a key role in the transition to net zero by promoting transparency and building trust and integrity in ESG-labelled products.

Nikhil Rathi, CEO, has reinforced the outcomes-based approach to guard against inconsistent regulation. The increased cost of living, with consumers more exposed to risk and more reliant on financial services, has focused the FCA approach to supervision. This includes targeting firms with inadequate ‘harm-prevention controls’. The executive summary confirms that 200 new staff have joined the FCA so far this year.

The FCA has also published a page entitled ‘outcomes and metrics’, which starts to put meat on the bones of FCA expectations around outcomes and metrics arising from the implementation of the Consumer Duty in April 2023.

Under ‘Consumer topline outcomes and metrics’:

  • Fair Value: Consumers receive fair prices and quality
  • Suitability & treatment: Consumers are sold suitable products and services and receive good treatment
  • Confidence:  Consumers have strong confidence and levels of participation in markets, in particular through (1) minimised harm when firms fail and (2) minimised financial crime
  • Access: Diverse consumer needs are met through (1) high operational resilience and (2) low exclusion

The 2022/23 Business Plan sets out the 13 core commitments for the next 3 years. 

Link: https://www.fca.org.uk/publication/corporate/our-strategy-2022-25.pdf

Link: https://www.fca.org.uk/data/fca-outcomes-metrics#mapping

StepChange Yearbook 2021

Following on closely from their 4-year strategic outlook, StepChange has published their yearbook for 2021. In 2021, they were contacted by 483,247 new clients seeking debt advice or guidance with ‘problem debt’. Their website received 5.9m. StepChange completed full debt advice online to 105,977 clients and by telephone to 65,255 clients. In the last DEMSA bulletin, I promoted the 4-year plan. I have extracted their roadmap, including the focus on ESG and Vulnerability. This also features the rise in debt advice sessions over time. It also recognises key regulatory milestones (e.g. Consumer Duty, SDRPs) and the MaPS debt advice commissioning to the new award timetable.

Ahead of the new energy costs rises, the proportion of StepChange clients behind on energy bills remained substantially higher than before the pandemic. Additionally, the average electricity arrears debt per client increased by £150 between 2020 and 2021. 28% of clients at the time of advice were in arrears on their electricity bill, and 23% on their gas bill.

Richard Lane, director of external affairs at StepChange, said:

“With arrears on priority bills becoming more common, 2022 is going to be a tough year for many, and not just because of energy prices. We can see that the financial impact of the Covid pandemic was still being felt among many of our clients last year, and this is now being exacerbated by cost-of-living pressures. If things go on as they are, we could see the proportion of our clients who have a negative budget rise from around a quarter to more like a half.”

In 2021, 56% of all new clients were in a vulnerable situation at the time of advice. This has increased over recent years. The most common forms were:

  • Depression (13%)
  • Stress or anxiety (13%)
  • Physical disability (7%)
  • Suicidal tendencies (6%)
  • Domestic violence (5%)

Poor mental health remains closely associated with debt problems and 39% of all new clients were experiencing some form of impaired mental health at the time of advice.

Link: https://www.stepchange.org/media-centre/press-releases/2021-client-statistics.aspx

Debt advice can be life-changing, but advisers can’t work miracles

I picked up on this PFRC Blog by Sharon Collard and some work she has been doing with Jamie Evans. DEMSA has collaborated with Sharon, Jamie, Chris Fitch and Colin Trend in previous research activity.  

“Despite all the positive help that debt advice agencies provide, there are limits to what can be achieved for people in serious difficulties who have little or no spare income to pay back what they owe and for whom bankruptcy or debt relief fees may be prohibitive. In some cases, debt advisers may be able to do no more than confirm there is no real tangible help available or any recourse to additional financial support. This points to the need for wider reforms outside the debt advice sector such as adequate state safety nets, real living wages and better access to debt relief.”

See also  6 Best Practices to achieve Collections Agility

Dealing with deficit budgets is likely to become increasingly common, including customers with tangible assets.

Link: https://www.linkedin.com/posts/sharon-collard-18415227_debt-advice-can-be-life-changing-but-advisers-activity-6916727734958235648-GCs6?utm_source=linkedin_share&utm_medium=member_desktop_web

Link: https://pfrc.blogs.bristol.ac.uk/2022/04/04/debt-advice-can-be-life-changing-but-advisers-cant-work-miracles/

IVA volume provider report by IPA

The ‘Volume Provider Regulation Scheme – 2021 Benchmark Report’ has been produced by Dave Holland, Chief Inspector at the IPA. Dave and I have regular catchups on emerging events like the SDRP consultation, FCA Debt Packagers consultation, AML and insolvency reform.

Launched by the IPA, the Volume Provider Regulation (VPR) Scheme came into effect on 1 January 2019. The VPR Scheme was rolled out in response to working practices in the IVA market, which continued to feature in the Woolard report in February 2021 and recent consultation around insolvency reform. In July 2019, the Scheme was extended to cover Scottish Protected Trust Deeds (PTDs) administered at volume.

The Scheme has continued to grow in its third year, welcoming both new IVA and PTD provider members Harper McDermott, StepChange Voluntary Arrangements and The IVA Advisor. During 2021 the Scheme covered 68% of the IVA market and 79% of the PTD market. The Scheme market coverage is expected to increase further during 2022 with new members joining.

The IPA have campaigned for an audit of the commercial landscape in the IVA market, the introduction of new regulatory powers to regulate firms and a review of debt management products in their entirety. As a consequence, the IPA welcome the Insolvency Service’s review of the personal insolvency landscape which was announced in September 2021 as part of their 5-year strategy.

As featured in recent DEMSA bulletins with input from StepChange and Cerebreon, the IPA Scheme has continued its focus of reviewing case failures during 2021, as we all know this remains an area of concern. 5.74% of IVAs failed across Scheme members during 2021, which is a noteworthy improvement on the 8.4% sector statistic relating to failures released by The Insolvency Service for 2019. As with the 2020 review into failures, the 2021 review identified that there are no particular reasons or trends for the failure of an IVA/PTD. The full detail on the failure review can be found in Chapter 8 of this report.

Chapter 9 focuses on the reasons why individuals choose an IVA over other debt solutions in response to concerns raised by The Insolvency Service and the FCA (e.g. arising from the Debt Packager consultation).

The IPA has entered into discussions around the cost-of-living crisis with The Insolvency Service, the IVA Standing Committee and the Accountant in Bankruptcy. This is designed to ensure that the insolvency profession responds to this changing environment in a positive and proactive way to help people at a time when help is most needed. Dave has reflected around the IVA Protocol that it allows for Supervisors to have discretion to vary repayments by 15%. This level has worked well during recent times when inflation rates have remained stable, but in the current climate expectations should be reviewed. This will allow IVA Supervisors more discretion for reductions in payments and still ensure that clients can successfully complete their IVA, without it being necessary to seek further creditor approval to agree increases of expenditure outside of the original limits.

There are a number of Scheme members on the circulation list. Worth a read for the wider audience.

Link: https://insolvency-practitioners.org.uk/wp-content/uploads/2022/04/IPA-Future-of-Insolvency-Regulation-Consultation-Response.pdf

Link: https://insolvency-practitioners.org.uk/wp-content/uploads/2022/04/VPR-Benchmark-Report-2021.pdf

Link: https://www.gov.uk/government/consultations/the-future-of-insolvency-regulation

How to complete and submit the Debt Relief Order (DRO) application form

I noticed that this had been published on The Insolvency Service website on 7/4/2022. This includes the evidence required to support the application with a DRO intermediary. Given the Boris story above, it references assets (Note: Wimbledon trophies buried in the cellar are missing from the examples provided on the site).   

Link: https://www.gov.uk/guidance/how-to-complete-and-submit-the-debt-relief-order-dro-application-form

Note that the 1 April 2022 the DRO guidance for debt advisers has been updated. Additional entries to guidance on:

  • Avon representatives
  • Backdated PIP
  • Catalogue accounts
  • Child savings accounts
  • Child support from EU countries
  • Employee share schemes
  • Funeral costs
  • Guarantors
  • Highland titles
  • Joint bank accounts
  • Lien over immigration documents
  • Private number plates
  • Refugee interrogation loans
  • Removal costs
  • Rent arrears
  • Risk of violence from creditors
  • Save as you earn schemes
  • Sending money abroad
  • Timeshares
  • Debts for drugs
  • Illegal money lending
  • Join water debts

I am not sure whether the ‘risk of violence from creditors’ relates to loan sharks, where there is a reference to illegal money lending as well.

Link: https://www.gov.uk/guidance/debt-relief-orders-guidance-for-debt-advisers#full-publication-update-history

ICO call for views: Anonymisation, pseudonymisation and privacy enhancing technologies guidance

Accountability and governance

The latest ICO post on LinkedIn may be relevant to those in the AI/ML space using annonymised data to build algorithms. It has certainly come up in several meetings and workshops that I have been involved in over the last fortnight.

Link: https://www.linkedin.com/posts/information-commissioner%27s-office_focus-on-accountability-and-governance-activity-6916670875140268032-R2km?utm_source=linkedin_share&utm_medium=member_desktop_web

Link: https://ico.org.uk/about-the-ico/ico-and-stakeholder-consultations/ico-call-for-views-anonymisation-pseudonymisation-and-privacy-enhancing-technologies-guidance/

Events

CCTA conference – 26-27 April 2022

I am speaking to Julian Graham-Rack, CEO of PrinSIX, on Monday before his session at the CCTA later in April. A number of the circulation will be attending, including the Vulnerability Registration Service (VRS). Topics on the CCTA agenda include the FCA’s new Consumer Duty, affordability and vulnerability. They will also explore developments in technology and how customer engagement continues to evolve.    

Lending Technology Think Tank review

My thanks to Chris Warburton for bringing this to my attention and the results from some of the polls run, including the poll around Open Banking adoption where 45% of respondents said that they had already implemented it. In terms of information that lenders need to enable better risk-based decisions, 83% felt that this should be real-time. There was also room for improvement in the RegTech used by regulated firms. Lantern and Perch are sponsoring. Alongside VRS, Data on Demand are exhibiting (assuming Simon is fit enough).  

Link: https://www.credit-connect.co.uk/news/lending-technology-think-tank-2-1-review/

ISO 22458 – Consumer Vulnerability kitemark – launch on 5 May 2022

DEMSA has registered for the launch of ISO 22458 at a venue that will be familiar to MALG veterans. It starts at 9:30 on 5 May 2022 at the Royal College of Surgeons.

This session introduces ISO 22458 ‘Consumer vulnerability’, which builds on BS 18477. Since its publication, BS 18477 has been widely referenced by UK regulators and used by firms in regulated essential services (e.g. financial services, water and energy). ISO 22458 covers the design and delivery of inclusive services, helping firms deliver fair, flexible and inclusive services in line with the FCA Consumer Duty. This event will set out the key principles and objectives of ISO 22458 Consumer vulnerability.

At the launch event, a panel of UK and International leaders from business, regulators and consumer organisations will explore how ISO 22458 has the potential to:

  • Embed inclusive service principles throughout an organization, from senior management to frontline staff
  • Improve understanding of vulnerability and the impact it has on consumers’ lives 
  • Help service providers to implement best practice in identifying and supporting consumers in vulnerable situations
  • Help service providers to deliver a fair, flexible and inclusive approach based on real lived experiences
  • Improve positive outcomes and minimise harm for vulnerable consumers

A number on the circulation have already had initial discussions with Jo and Kiren from BSI. I have copied them on this email if you wish to follow up directly. I am trying to entice a few more to join me in London on 5 May 2022. The launch precedes BSI Consumer Forum Conference 2022 (starting at 11am).   

Link: https://www.bsigroup.com/en-GB/our-services/events/bsi-consumer-forum-conference-2022-bsi-launch-event-iso-22458/

Net Zero Week 2022 – webinars between 25/4 to 28/4

My thanks to Jo for promoting Net Zero Week 2022 as part of our growing focus on ESG at all levels. Not to be confused with the UK’s National Awareness Week 2-8 July 2022.

There is a webinar on 25/4/2022 on ‘How standards for sustainable finance can accelerate the net zero transition’.

In terms of when this begins to hit smaller firms, the message that SMEs are responsible for half of the UK’s Greenhouse Gas emissions is likely to raise a few eyebrows. I have downloaded the ‘Little Book of Net Zero’ on the BSI site.

Link: https://www.bsigroup.com/en-GB/our-services/events/webinars/2022/net-zero-week/?utm_source=linkedIn&utm_medium=social&utm_content=gaggleamp&utm_campaign=SM-STAN-BEV-ENVI-NetZeroWeek-2204

Link: https://www.bsigroup.com/en-GB/topics/sustainable-resilience/net-zero/the-little-book-of-net-zero/?utm_source=LinkedIn&utm_medium=Pardot&utm_campaign=NSB-SOCIAL-2022

Link: https://netzeroweek.com/#/

Vulnerability Summit – 5/10/2022

I have a call with Kitty Wood, Credit Strategy, on Monday to see if we can encourage more participations from the debt advice sector and specialist support providers, as prices for the event are high.

Link: https://www.vulnerabilitysummit.co.uk/


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