KEY THEMES+ ¦ DEMSA Summary

What you need to know this week

  • Bank Rate held at 4% following the MPC meeting ending 17 September 2025; governor warns inflation risks remain.
  • UK public borrowing in August 2025 reached £18 billion, the highest for that month in five years.
  • Cyber-attack affecting Collins Aerospace software caused operational disruption at Heathrow and other European airports.
  • Enforcement Conduct Board consultation open on ‘Vulnerability and Ability to Pay’ standards for enforcement activity.
  • Phase One consultation on Consumer Credit Act reform (CCA) has closed; Phase Two expected in 2026.
  • ICO published cyber-security tips for small businesses and launched Data (Use and Access) Act amendments consultations (closing October).
  • FCA motor-insurance interventions: ~270,000 motorists affected and ~£200m in compensation estimated.
  • Joint RPB interim guidance: insolvency office-holders should not undertake speculative investigations into historical car-finance / valuation claims.
  • Insolvency Service (August 2025): 11,348 individual insolvencies (622 bankruptcies, 4,239 DROs, 6,487 IVAs); DROs at record levels.
  • StepChange (August 2025): 89% of clients start advice online; 46% in full-time employment; StepChange registered 4,070 Breathing Spaces (60% of total).
  • MEGA.AI raised €1.7m to scale compliant AI voice solutions for regulated customer conversations.
  • Key upcoming events: DEMSA webinar 25 Sep 2025 (webinar), Missing Out report webinar 24 Sep 2025, One Voice on Affordability — 9 Oct 2025, Edwardian Hotel, Manchester; StepChange Connected — 16 Oct 2025, Leeds.

Key Themes

Macroeconomic and fiscal environment link

  • Bank Rate and inflation risk. The MPC held Bank Rate at 4% (17 Sep 2025).
    • Why it matters: Interest-rate setting drives funding costs, debt-servicing profiles and affordability assessments. Firms must reassess repayment capacity assumptions, pricing for arrears products and provisioning models.
  • Public borrowing pressure. UK borrowing of £18bn in August 2025 increases fiscal constraint ahead of the Budget.
    • Why it matters: Higher borrowing can influence government policy choices, regulatory priorities and macroprudential signals that affect consumer credit demand and enforcement activity.
See also  Newsletter Key Themes ¦ Industry and Regulatory Developments - DEMSA

Cybersecurity, resilience and data governance [link] [link]

  • Operational incidents and supplier risk. A cyber-attack affecting Collins Aerospace software disrupted airport operations.
    • Why it matters: Third-party outages create acute customer detriment and reputational risk; firms should evaluate supplier SLAs, incident playbooks and communications protocols to protect vulnerable customers.
  • ICO guidance and consultations. ICO’s cyber tips and the Data (Use and Access) Act consultation emphasise foundational controls and regulatory expectations.
    • Why it matters: Regulatory scrutiny expects demonstrable cyber hygiene; weak controls complicate FCA authorisations and can be material in consumer-detriment assessments.

Regulatory reform and enforcement [link] [link] [link]

  • Vulnerability and Ability to Pay standards (ECB). Consultation focuses on better identification/response and promoting sustainable payment arrangements.
    • Why it matters: Enforcement agents and creditors must incorporate vulnerability screening into collection strategies and evidence sustainable outcomes in regulatory reporting.
  • CCA reform (Phase One closed). Transfer of responsibilities to the FCA and alignment with Consumer Duty proposed. Phase Two will detail implementation.
    • Why it matters: Firms should anticipate rule changes that affect product governance, communications, affordability assessments and compliance frameworks.

Consumer protection and market interventions link

  • FCA motor-insurance remediation. Estimated c.270,000 customers and c.£200m compensation for underpaid claims.
    • Why it matters: Valuation practices and historical conduct reviews have cross-sector relevance — particularly where vehicle valuations feed into insolvency asset assessments and affordability modelling.

Insolvency and debt-relief trends [link] [link]

  • Rising volumes and remedy mix. August 2025 saw 11,348 entries to insolvency; record DRO registrations and elevated IVA volumes.
    • Why it matters: Higher demand for formal remedies requires scaled operational capacity across advice, adjudication and creditor engagement; firms must update triage and affordability workflows.
  • RPB interim guidance on car finance claims. Avoid speculative estate investigations until scheme scope is clear.
    • Why it matters: Protects estate value and prevents disproportionate SIP-9 expenditure; advice firms should ask clients about claim registrations and record guidance in case files.
See also  DEMSA Key Themes ¦ Industry and Regulatory Developments

Client behaviour and access to advice link

  • Digital first and employment profile. 89% of StepChange clients start online; 46% in full-time employment. Deficit budgets and reasons for debt remain stable.
    • Why it matters: Digital channels are primary acquisition routes; collection strategies and digital engagement must be optimised for employed customers with transient liquidity issues.

Operational compliance, technology and Consumer Duty [link] [link]

  • Compliance as strategic capability. Real-time analytics, agent-assist tooling and integrated QA frameworks enable consistent Duty outcomes.
    • Why it matters: Embedding compliance into operations reduces regulatory friction, improves customer outcomes and can generate efficiency gains when governed correctly.
  • VRS and data integrations. Integrating the Vulnerability Registration Service reduces repeated disclosures and standardises contact preferences.
    • Why it matters: Reduces operational burden, improves vulnerability detection, and provides audit trails needed for supervisory review.

Partnerships and market innovation [link] [link] [link] [link] [link]

  • IE Hub & National Debtline collaboration. Streamlined, consented sharing of income & expenditure and benefit checks.
    • Why it matters: Reduces duplication in I&E gathering, shortens adviser handling time and strengthens evidence for affordability proposals.
  • MEGA.AI funding and compliant voice agents. Investment in regulated-context AI voice agents to automate routine customer conversations.
    • Why it matters: Potential to lower operating cost per contact but requires robust algorithmic governance, auditability and regulatory readiness.

Sector events, knowledge sharing and practical dissemination [link] [link]

  • Active engagement calendar. Webinars and in-person events (24–25 Sep, 9 Oct, 16 Oct) focus on vulnerability, social-tariff enrolment and affordability alignment.
    • Why it matters: Attendance enables horizon scanning, supplier selection and peer benchmarking; events provide material for policy and operational change programmes.

Key Statistics

  • Bank Rate: 4% (MPC decision ending 17 September 2025).
  • UK public borrowing: £18 billion in August 2025.
  • Individual insolvencies (England & Wales): 11,348 in August 2025 (↑7% month on month; ↑16% year on year).
  • Debt Relief Orders (DROs): 4,239 in August 2025 — record high since 2009.
  • Individual Voluntary Arrangements (IVAs): 6,487 registered in August 2025.
  • Breathing Space registrations: 7,395 in August 2025; 105 Mental Health breathing spaces.
  • StepChange Breathing Space registrations: 4,070 (60% of total) in August 2025.
  • StepChange client channel: 89% start the debt-advice journey online (August 2025).
  • StepChange client employment: 46% in full-time employment (August 2025).
  • FCA motor-insurance remediation: ~270,000 customers; ~£200m compensation.
  • MEGA.AI fundraise: €1.7m.
  • DROs in August 2025 were 88% above the 2015–2024 monthly average (2,252).
See also  KEY THEMES+ ¦ DEMSA Summary

Newsletter Contents

  • Bank Rate held at 4% after MPC meeting (17 Sep 2025).
  • August 2025 UK public borrowing £18bn — fiscal pressures ahead of Budget.
  • Heathrow and other airports affected by a Collins Aerospace software cyber-attack.
  • ECB consultation: Vulnerability and Ability to Pay standards — submissions invited.
  • Phase One CCA reform consultation closed; Phase Two expected in 2026.
  • ICO issues cyber-security tips for small businesses; Data Act consultations open.
  • FCA motor-insurance remediation: c.270,000 customers affected; c.£200m compensation.
  • Joint RPB interim guidance: no broad speculative investigations into car finance claims.
  • Insolvency Service (Aug 2025): 11,348 insolvencies; record DRO levels and elevated IVAs.
  • StepChange metrics: 89% digital starts; 46% employed clients; StepChange recorded 4,070 Breathing Spaces.
  • Technology and compliance: VRS Pega component, voice analytics, and MEGA.AI funding highlight operational change.
  • Events: Missing Out webinar 24 Sep 2025; DEMSA webinar 25 Sep 2025; One Voice on Affordability — 9 Oct 2025 (Edwardian Hotel, Manchester); StepChange Connected — 16 Oct 2025 (Leeds).

Find the full DEMSA newsletter, commentary and links here

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