KEY THEMES+ ¦ DEMSA Summary

What you need to know this week

  • Bank of England Q1 2025 Credit Union data shows arrears rising despite small rebounds in assets and profits.
  • UK private rents rose to £1,343 by July 2025, with growth slowing but still increasing pressure on households.
  • FCA and VRS highlight Consumer Duty two years on, focusing on third-party vulnerability data and “tell us once” models.
  • Ofgem confirmed a 2% rise in the energy price cap from October 2025, adding £35 to typical household bills.
  • Insolvency Service FoI response shows median DRO debt at record levels (£13,500).
  • Ofgem AI sandbox consultation closes on 18 September 2025, with AI Reg Lab to follow in October.
  • Fernwood Financial Limited enters liquidation with all customer loan balances written off.
  • StepChange August newsletter covers BNPL regulation and rising rental costs; StepChange Connected takes place 16 October in Leeds.
  • Money Charity data shows 264,294 Citizens Advice enquiries in July 2025, with debt issues up 6.8% year-on-year.
  • FCA clarifies workplace savings scheme rules, supported by HMT, MaPS, ICO, DBT, and PRA.
  • EDF launches £30m Winter Support Package with TellJo and partners to address rising energy debt.
  • Key upcoming sector events include MALG NE Forum (9 Sept), CSA UKCCC (11 Sept), FourNet Compliance Event (17 Sept), and Utility Week Vulnerability & Collections (18 Sept).

Key Themes

Credit Union sector resilience link
Q1 2025 Credit Union data shows arrears rising in both value and volume, signalling heightened repayment pressures. While assets and profits rebounded marginally, reduced income and expenditure highlight market volatility. This is critical for lenders and debt managers monitoring borrower stress and affordability trends.

Housing and rental market pressures link
Private rents climbed to £1,343 in July 2025, despite growth easing to 5.9%. Persistent rental inflation directly impacts disposable incomes, exacerbating financial vulnerability and increasing demand for debt advice and support.

See also  Newsletter Key Themes ¦ Industry and Regulatory Developments - DEMSA

Consumer Duty and vulnerability link
Two years into Consumer Duty, FCA directors emphasise the importance of third-party vulnerability data and integrated approaches (“tell us once”). This aligns with Ofgem and Ofwat strategies and signals greater regulatory expectations on data-sharing and customer segmentation. Firms in collections must prepare for heightened scrutiny on how vulnerable customers are identified and supported.

Energy market affordability link, link, link, link
Ofgem confirmed a 2% price cap rise from October 2025, pushing typical bills to £1,755. With arrears already averaging over £1,500 without repayment plans, the affordability challenge remains acute. The regulator will shortly announce its debt strategy, which may rebalance debt allowances and introduce relief schemes. For financial institutions, this underscores rising credit risk and consumer vulnerability.

Personal insolvency trends link
Insolvency Service FoI data shows median Bankruptcy debts at £51,000 and DRO debts at £13,500, the latter at record highs. The increase reflects higher eligibility thresholds introduced in 2024. Firms need to anticipate rising use of DROs as a route for highly indebted households.

AI in energy and collections link, link
Ofgem’s AI sandbox consultation (closing 18 September) highlights testing AI for customer engagement, energy demand prediction and grid management. With the AI Reg Lab due in October, energy firms and credit managers must anticipate increased oversight of AI use, balancing innovation with compliance.

Firm liquidation and customer protection link
Fernwood Financial Limited entered liquidation, writing off all customer balances. The FCA has directed customers to cancel payments. This highlights ongoing risks in the high-cost credit sector and the need for robust communication to protect consumers and debt solution providers.

See also  DEMSA Key Themes ¦ Industry and Regulatory Developments

Sector insights and statistics link
The Money Charity reports rising advice demand: Citizens Advice handled over 264,000 enquiries in July 2025, with debt the second largest category. The top three debt types were fuel, assessments and council tax arrears. These insights point to growing household pressures and a demand spike in advice services.

Workplace savings schemes link
The FCA clarified rules on workplace savings schemes in collaboration with other authorities. With 1 in 10 adults having no cash savings, and 1 in 5 having less than £1,000, workplace savings could provide resilience. For employers, this represents a potential expansion of payroll-based financial support.

Utility sector collaboration link, link
EDF’s £30m Winter Support Package combines debt relief with wellbeing data from TellJo, alongside partnerships with Citizens Advice, IncomeMax and Charis Grants. This demonstrates the shift towards integrated support, linking financial and non-financial data to improve early intervention outcomes.

ISO 22458 accreditation and water sector reform link, link, link
Accreditation activity under ISO 22458 continues, particularly in water and energy, embedding inclusive design in service delivery. Meanwhile, proposed reforms to the WaterSure support scheme aim to expand eligibility and simplify processes. This will reshape how utilities engage with vulnerable customers, requiring debt managers to adapt processes to align with new tariff frameworks.

Upcoming industry events link, link, link
Key dates: MALG NE Forum (9 Sept, online), CSA UKCCC (11 Sept), FourNet event (17 Sept, Manchester), Utility Week Vulnerability & Collections (18 Sept), Missing Out 2025 (24 Sept), and StepChange Connected (16 Oct, Leeds). These events provide updates on AI adoption, compliance challenges, and vulnerability strategies relevant to credit and collections professionals.

See also  KEY THEMES+ ¦ DEMSA Summary

Key Statistics

  • Credit Union adult membership rose 0.33% to 2.16m in Q1 2025.
  • Credit Union assets increased 0.14% to £4.89bn after the first fall since records began.
  • Credit Union income fell 12.98% to £99.62m while expenditure fell 15.76% to £86.83m.
  • Interim Credit Union profits rose 12.24% to £12.77m in Q1 2025.
  • UK private rents reached £1,343 per month in July 2025.
  • Energy price cap rise adds £35 to annual bills, taking the typical total to £1,755.
  • Average arrears without repayment plans: >£1,500.
  • Median DRO debt reached £13,500, the highest on record.
  • Citizens Advice handled 264,294 enquiries in July 2025, with 50,217 debt issues (+6.8% YoY).
  • 1 in 10 UK adults have no cash savings; 1 in 5 have <£1,000 savings.

Newsletter Contents

  • Bank of England Credit Union statistics Q1 2025.
  • ONS rental data showing continued price increases.
  • FCA and VRS reflections on Consumer Duty two years on.
  • Ofgem October 2025 energy price cap rise.
  • Insolvency Service FoI response on Bankruptcy and DRO debt levels.
  • Ofgem AI technical sandbox consultation.
  • Fernwood Financial Limited liquidation.
  • StepChange August newsletter and StepChange Connected event.
  • Money Charity July 2025 statistics.
  • FCA clarification on workplace savings schemes.
  • EDF £30m Winter Support Package in collaboration with TellJo and partners.
  • Upcoming events: MALG, CSA UKCCC, FourNet, Utility Week, Missing Out 2025, StepChange Connected.

Find the full DEMSA newsletter, commentary and links here

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