[INSIGHTS] Borrowers in Financial Difficulty

Kevin Still provides an update on the evolving landscape of consumer duty and borrowers facing financial difficulty, primarily focusing on regulatory changes and challenges in the financial industry. He touches upon recent speeches from the Financial Conduct Authority (FCA) emphasizing consumer duty, the ongoing efforts to address the cost of living and vulnerability issues, and forthcoming changes to the FCA handbook. The discussion delves into the need for better affordability assessments, vulnerability assessments, and the potential merging of particularly vulnerable with vulnerable categories. Trade bodies have raised concerns, particularly for small and medium-sized firms, regarding these changes. The conversation highlights the importance of staying informed and prepared as the financial regulatory environment continues to evolve.

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Key Points

  1. Recent speeches by the FCA emphasize the significance of consumer duty in the financial industry.
  2. The FCA’s three-year strategic plan includes a focus on the cost of living, vulnerability, and implementing the consumer duty.
  3. The consumer duty is set to be implemented on the first and 31st of July.
  4. CP 2313 addresses borrowers in financial difficulty and aims to make permanent some tailored forbearance measures.
  5. The FCA stresses the importance of sharing good practice and industry support for the consumer duty.
  6. There is ongoing concern regarding the worsening financial situation of consumers.
  7. Changes to Sourcebook seven, particularly related to arrears management and debt recovery, are on the horizon.
  8. The discussion emphasizes the need for better affordability and vulnerability assessments.
  9. Consultation CDP 2321 is transitioning from aggregated data to line-level credit information.
  10. Trade bodies have raised objections and concerns, especially for small and medium-sized firms.
  11. The possibility of changes going into the FCA handbook is considered.
  12. The conversation touches on the complexity of defining and assessing vulnerability in various scenarios.
See also  Unforeseen Impacts

Key Statistics

  1. The FCA’s three-year strategic plan takes the industry to March 2024.
  2. The Consumer Credit Trade Association has raised concerns about the impact of regulatory changes on small and medium-sized firms.
  3. Consultation CP 2321 is transitioning from aggregated data to line-level credit information.
  4. There are ongoing surveys indicating a worsening financial situation for consumers.
  5. Trade bodies have suggested that applying additional rules alongside existing interventions may pose challenges for the industry.

Key Takeaways

  • The consumer duty and addressing financial difficulty remain top priorities for the FCA.
  • The financial industry is urged to stay informed about evolving regulations and industry best practices.
  • Small and medium-sized firms may face challenges in adapting to regulatory changes.
  • Affordability and vulnerability assessments play a crucial role in ensuring fair treatment of borrowers.
  • The transition to line-level credit information represents a significant shift in data reporting.
  • The definition and identification of vulnerability in customers vary across sectors.
  • There is a need for flexibility in regulatory approaches to accommodate different scenarios.
  • The financial industry should be prepared for potential changes in the FCA handbook.
  • Ongoing surveys highlight the worsening financial situation for many consumers.
  • The industry is advised to focus on resilience in the face of regulatory changes and financial challenges.

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