What you need to know this week
- FCA outlines three strategic priorities for consumer credit: innovation, support for vulnerable customers, and improved access to affordable credit.
- Ofgem issues policy update on its Debt Relief Scheme, targeting energy arrears accumulated between April 2022 and March 2024.
- Mortgage arrears fell in Q2 2025, but possessions rose by 10% compared to Q1.
- FOS consultation on differentiated case fees continues, with possible changes to complaint handling cost allocation.
- New consultation from Ofwat mandates customer involvement in water company decision-making.
- Council tax reform proposals aim to modernise billing and collections, with a focus on vulnerability and support.
- FCA’s Cyber Coordination Group shares key insights on AI governance, operational resilience, and emerging cyber risk controls.
- DebtStream and MEGA.AI partner to deliver integrated voice and digital collections technology.
- Octopus Energy extends use of the NSN Support Hub to connect customers to targeted support services.
- StepChange outlines transformation to digital operations using Genesys and Connect platforms.
- Inicio AI appoints Victoria Oliver as Chief Commercial Officer.
- Upcoming events include MALG North East (9 Sept), CSA conference (11 Sept), and FourNet compliance event (17 Sept).
Key Themes
FCA Strategy on Consumer Credit
The FCA’s link consumer credit roadmap outlines its strategic focus on three pillars: encouraging useful innovation, ensuring vulnerable consumers receive compassionate support, and improving access to appropriate credit. These are critical as firms grapple with the balance between consumer protection and responsible lending, especially in light of CCA reform, BNPL regulation, and FCA oversight expansion.
Ofgem Debt Relief and Strategy Updates
Ofgem’s link working paper proposes a phased Debt Relief Scheme (DRS) addressing energy arrears for vulnerable households. Implementation is expected in 2026, with supplier reimbursement, engagement conditions, and data sharing forming core components. This directly affects energy sector collections, supplier operational readiness, and upstream-downstream debt management practices.
Mortgage Arrears and Possessions Trends
UK Finance link, StepChange link data show a 3% fall in homeowner mortgage arrears in Q2 2025, yet a 10% rise in possessions. Arrears levels have grown significantly over the past two years. Monitoring is essential for lenders and advisers, especially with affordability pressures and increased forbearance challenges.
Council Tax Reform Consultation
The government’s link consultation explores reforms to billing, collection, and enforcement in England. Key themes include extending default billing to 12 months, targeting support via exemptions, and improved use of data sharing for vulnerable consumers. Relevant for debt advisers and enforcement agents due to proposed changes to liability orders and enforcement triggers.
FCA Cyber Coordination Group Insights
FCA link publishes its 2024 insights from its Cyber Coordination Group, emphasising AI usage in cyber defence, QA automation, and internal governance. This is vital for operational resilience and compliance teams managing emerging technology risk.
Water Sector Consumer Co-Design Rules
Ofwat’s [link] [link] consultation mandates consumer involvement in material decision-making by water companies. This includes understanding preferences, feedback loops, and governance changes. Credit and collections professionals in the utility space will need to align practices with new accountability structures.
FOS Differentiated Case Fees
The FOS link consultation explores variable case fees depending on outcome and complaint stage. Given the low uphold rates across debt counselling and adjusting, this could be financially beneficial for some firms. However, the shift toward activity-based costing raises wider concerns about the FOS operating model and proportionality.
Digital Transformation in Collections
StepChange link continues its digital shift, illustrating how large debt advice providers are investing in service automation while maintaining compliance and support quality. This is a benchmark for similar organisations seeking tech-enabled efficiencies.
AI and Collections Collaboration
DebtStream and MEGA.AI’s link partnership offers integrated voice-first and self-service journeys. This is important as firms seek to reduce costs and improve customer outcomes through AI-powered contact strategies. Innovations include real-time QA, outbound engagement, and regulatory compliance monitoring.
NSN and Octopus Support Hub
NSN’s link collaboration with Octopus Energy demonstrates the application of third-party digital platforms to extend support services, particularly for vulnerable customers. Relevant to firms designing blended ecosystems of in-house and external support channels.
Appointments
Victoria Oliver appointed as Chief Commercial Officer at Inicio AI, taking over from Caroline Walton. Her experience across financial services and utilities brings a cross-sector perspective relevant to product development and client onboarding strategies.
Events
- MALG North East Forum: 9 September 2025 (Zoom) – Focus on AI in collections and wellbeing. link
- CSA Conference: 11 September 2025 – Industry-wide discussions on redress systems. link
- FourNet Competitive Compliance Event: 17 September 2025, Treehouse, Manchester – Regulatory and operational risk discussions. link
Key Statistics
- UK economic growth at 0.3% in Q2 2025, down from 0.7% in Q1 2025.
- Homeowner mortgage arrears: 87,380 cases, down 3% QoQ.
- BTL mortgage arrears down 5% QoQ.
- Mortgage possessions increased by 10% in Q2 2025 to 1,340 cases.
- Average mortgage arrears for StepChange clients in 2025: £11,531 – up from £10,239 in 2024 and £6,054 in 2023.
- Debt Relief Scheme Phase 1 target: 195,000 means-tested benefits customers.
- Estimated eligible energy debt: £300m across 300,000 customers.
- Ofgem smart meter compliance has restored over 600,000 devices in the last year.
- 62% of consumers see standing energy charges as unfair.
- FOS data: Debt recovery had 369 complaints with a 34% uphold rate in Q2 2025.
Newsletter Contents
- FCA publishes forward-looking strategy for consumer credit.
- Ofgem updates on energy sector Debt Relief Scheme and debt strategy consultation.
- UK Finance and StepChange release latest mortgage arrears and possessions figures.
- Government consults on modernising council tax administration in England.
- FCA shares AI-focused cyber risk and operational resilience insights.
- Ofwat mandates consumer involvement in water company decisions.
- FOS explores changes to its case fee charging model.
- StepChange highlights digital shift via Connect and Genesys.
- DebtStream and MEGA.AI announce voice and digital tech partnership.
- Octopus Energy customers benefit from NSN’s Support Hub.
- Inicio AI appoints new Chief Commercial Officer.
- Three sector events confirmed for September 2025.
Find the full DEMSA newsletter, commentary and links here
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