From the desk of Kevin Still
Research by the Institute for Fiscal Studies (IFS) has found that the latest increase in the UK state pension age has led to record highs in employment among 65-year-olds. The study found that around 55,000 more 65-year-olds were in paid work in 2021 as a result of the gradual rise in the pension age. The IFS said that in the most deprived fifth of areas, the employment rate for women aged 65 or over rose from 15% to 28%, and from 24% to 34% for men.
Something that Fiona Macaskill has highlighted before, almost half of firms subject to the apprenticeship levy have returned unspent levy funding to the Treasury according to a new survey. The CSA has their skills summit on 10 February 2022. This will take place during National Apprenticeship Week 2022, the theme for which is ‘Build the Future’.
This event will provide an opportunity for CSA members and organisations in wider sectors including Local Authorities and Government agencies to understand how they can cost-effectively recruit, retain and upskill people in business-critical areas of credit, collections, compliance, counter fraud and debt advice. DEMSA has highlighted to MaPS, HM Treasury and John Glen MP the need to invest in competent debt advisers as debt advice providers issue more ‘red flags’ around the imminent challenges of cost of living, energy and tax rises.
Experian and The National Literacy Trust has partnered on a financial literacy campaign. ‘Words That Count’ is a national campaign to boost the financial literacy and understanding of 6m young people aged between 16 and 24 in the UK.
The Money Charity has published its January 2022 report. It reflects that debt advice agencies supporting those facing financial difficulties are also beginning to report increases in enquiries as many of these circumstances are felt.
Many of you will have seen the announcement that Trustfolio acquired TIPTrust and Asperitas to create a ‘debt-tech’ collective. Lou Yates explains in the link below.
Response from HM Treasury on Statutory Debt Repayment Plan (SDRP) consultation
I received a response from Shannon Cochrane, HM Treasury, on 27 January 2022 to my email of 17 January 2022 around progress on the SDRP consultation. I had also shared the DEMSA responses on BNPL and Council Tax collections. We will continue to push around priority aspects that would make SDRPs fit-for-purpose.
First of all, apologies for the slow reply. I hope better late than never, and that January has been kind to you.
Thank you for bringing all of your blogs to our attention, we’ve shared the attachments with the relevant policy colleagues.
On the SDRP consultation, we don’t have a firm date for that yet but it should be in the next few months. We know how keen everyone is to see the detail of the proposals, including on how payment breaks and plan variations (key to making plans resilient over time) will work, and our Minister has replied to PayPlan and FWG on the letters they sent as part of the efforts mentioned in your blog. You also flagged the desire for alignment with the DAS. The Government’s SDRP policy did include some big differences between DAS and SDRP, but we have tried to follow DAS precedents wherever we can, and when you see our new proposals we would be keen to hear where you think there are opportunities to align more closely. The same consultation will also include a draft Impact Assessment, so the work you’ve been doing to think about transition of back-book cases and possible case volumes sound like they’d be very valuable inputs. I hope you’ll make that work part of your consultation response when the time comes.
You also wrote to Gwyneth and Britta about the Money and Pensions Service and their debt advice commissioning exercise. We are liaising closely with MaPS on their next steps and understand the urgent need of the sector to have planning certainty. Our Minister (and his counterpart in DWP) also takes a close interest in securing a good outcome and appreciates the strength of feeling and concerns that have been expressed. Britta is the right lead for this and I’ve copied her in case there is anything that you want to follow up on, we will help if we can.
Thanks again for getting in touch and look forward to hearing from you again soon.
Very best wishes,
Shannon Cochrane | Head of Breathing Space Unit | Personal Finances and Funds | Financial Services
HM Treasury, 1/Blue, 1 Horse Guards Road, London, SW1A 2HQ
07971860294 | http://gov.uk/hm-treasury | Follow HMT on Twitter at @HMTreasury
You may have seen that Lord Agnew announced his resignation as minister for efficiency and transformation in the Treasury and Cabinet Office on 24 January 2022 in response to the government’s handling of the Covid-19 loan schemes.
FCA Operational Resilience slides
I have attached the slides from the webinar on 27 January 2022. Whilst there is not a lot of detail, the FCA has provided some pointers for firms.
MaPS Standard Financial Statement (SFS) figures from April 2022
After much debate on 24 January 2022 the governance group agreed the figures that take effect in April 2022. These will be published on the SFS site in the near future. Drop me a line if interested. The expected cost of living increases obviously occupied a lot of discussion.
There is some commentary to support the new figures. This covers changes to the savings category, the focus on rising inflation and the 16-18 year old category. I have until Tuesday to go back with comments. If anybody on the circulation has a view then please let me know.
2021 Personal Insolvency figures
The Insolvency Service has published the insolvency statistics for 2021. I have also provided the link to the corporate insolvencies for 2021.
The total number of individual insolvencies registered in 2021 was similar to the number registered in 2020 but 10% lower than 2019.
IVAs reached a record high in 2021 and accounted for 74% of all individual insolvencies. 2021 saw the lowest annual number of bankruptcies since 1989, while numbers of DROs were similar to 2020 but remained below pre-pandemic levels.
Quarterly Q4 2021
After seasonal adjustment, the number of individual insolvencies in Q4 2021 was similar to Q3 2021, but 12% lower than in Q4 2020. During Q4 2021, there were 27,349 (seasonally adjusted) individual insolvencies, comprised of 19,662 IVAs, 5,863 DROs and 1,824 bankruptcies. I have attached the Infographic.
Threat of rising home insurance costs for low-income households
Many of you may seen the publicity falling out of the Grenfell disaster in terms of the inevitable rise in insurance costs, notably in multiple occupancy buildings.
Michael Gove, Secretary of State for Levelling Up, Housing and Communities, has published a letter to the FCA and Competition and Markets Authority (CMA) requesting a review into the buildings insurance market for multiple-occupancy residential buildings. Quote:
“Since I took office, I have been extremely concerned to hear from innumerable leaseholders about the pressure they face from rapidly escalating building insurance premiums on high and medium-rise blocks of flats. I have been particularly concerned to hear of cases where insurance premiums have escalated by over 100% year-on-year, leaving residents with crippling costs. It is clear to me that the insurance market is failing some leaseholders.”
The FCA has since written to insurance firms and brokers with their expectations.
James Dalton, director general of insurance policy at the Association of British Insurers (ABI), said it recognised and sympathised with “the challenges leaseholders are facing”. He also said: “The cost of buildings insurance reflects the significant fire risks associated with many multiple-occupancy residential buildings, which go beyond cladding under a building control system that has been found to be ‘not fit for purpose’.”
The Financial Ombudsman Service has also published guidance for consumers around the FCA rule changes in motor and home insurance that took effect in January 2022.
CCS Debt Resolution Service framework
The 4-year ‘Debt Resolution Services’ roster has a total proposed work value of £645m. Its creation has been viewed as a show of faith in FinTech and FinTech-related solutions to improve public sector operations and the delivery of citizen services.
The framework comprises 20 service types. The ‘data solutions’ Lot 2 has particularly high promise for FinTech, with companies on the roster encouraged to provide ‘innovative and evolving’ solutions, including data aggregation and open banking. The ‘affordability and monitoring’ Lot 3 is designed to encourage integration of multi-bureau CRA data, open banking and automation software to get a better overview on individual circumstances, such as potential financial vulnerability.
Lot 2 – Data Solutions
- Equifax Limited
- TransUnion International UK Limited
- GB Group
- Xantura Limited
Lot 3 – Affordability and Monitoring
- Equifax Limited
- TransUnion International UK Limited
- Policy in Practice
- Paylink Solutions
- IE Hub
- Business Finance Technology Group Limited
- Qualco UK Limited
- Pastdue Credit Solutions
- Aryza UK Services
Congratulations to many of you on the circulation.
MaPS Equality Impact Assessments (EIA) for debt solution firms
MaPS has published some background information on Equality Impact Assessments (EIAs) ahead of awarding Lots 1 (National), 3 (Business) and 4 (DRO). Lot 2 has not progressed. Further to the DEMSA post on the impact of the FCA Consumer Duty, this is likely to be of wider interest across the supply chains for debt solution providers of all sizes. This may relate to engagement with specialist providers in the ecosystem.
For example, service adaptations for the deaf, visually impaired clients, those with limited mobility or other physical disabilities, or people with poor mental health. This may extend to where F2F service delivery is most applicable as part of the journey.
UK credit card Keebo launches for “credit invisibles” in “passion economy”
This caught my eye in the FinTech news. Keebo is launching a new Mastercard product with a headline rate of 27.98%. They are currently looking for their first 1,000 clients according to their website.
Keebo says it aims to tackle financial exclusion by helping people “unlock the power of credit” and is “the UK’s first credit card company to use open banking data to improve access to credit by understanding a customer’s broader financial behaviour, including spending habits, income frequency, and savings”. I am sure I have heard that several times before and am struggling to work out what is meaningfully different with this facility.
These “credit invisibles” are apparently part of the so-called “passion economy” – an economy built around “creators with a purpose” – people who want to start a brand, business, or community (usually on digital platforms) around a shared passion. The drive for critical mass may dilute this ambition. The website is in its infancy with some American spellings (e.g. Center) and some strange answers in the FAQs that don’t align with the question (e.g. What is the cost of open banking?). The credit risk assessment requires no adverse in the last 6 months and a willingness to access at least one bank account. Savings accounts can be linked up as part of the holistic assessment for credit limits up to £5,000.
Keebo was founded by CEO Michael Vanaselja and CTO Matthew Hallett. Last year, it closed a £5m seed equity round led by Breega (backers of Moneybox) and Connect Ventures (backers of TrueLayer). They have FCA registrations as a consumer lender and under the Payment Services Regulations 2017.
Going forward, I think there will need to be clarity on what type of credit search footprints are left when undertaking consumer credit underwriting decisions, which needs to extend beyond soft and hard searches referenced by Klarna in the DEMSA bulletin last week. Fintech Futures highlighted several new credit card entrants alongside open finance providers passing on the reduced cost of lending, processing and CRM to consumers.
On a similar note, I spotted the announcement that open banking platform, Tink, has launched ‘Income Check’ in the UK, a service designed to streamline income verification using open banking technology. I checked with PayLink, IE Hub and Cerebreon, and they all confirmed that this was already core functionality in their open banking propositions where you can verify a person’s income using secure and real-time data directly from the client’s bank account(s). This can be activated from secure ID & V checks, often a smartphone. This is based on assessing incoming transactions over more than 12 months which are categorised as salary, pension, benefits or cash deposits. Having reviewed the Keebo website, I think that it is going to be important to explain the use of open banking to consumers when wanting to ‘boost’ credit scores or take advantage of the ‘experience’ on offer. The ability to choose which accounts to link up always makes me nervous in ending up with only a partial view of someone’s finances and what is ‘in the pipeline’, which is going to be very relevant in any form of deferred credit (e.g. BNPL).
Further to previous DEMSA bulletins the new Cyber Essentials scheme has been implemented. This is increasingly a basic hygiene level for firms with a digital engagement model or part of a supply chain. Many of the readers have adopted Cyber Essentials Plus. This is explained in the links below.
My thanks to Niran Sereki, Security Architect, for highlighting this disturbing news story. The Red Cross announced that it had been the victim of a massive cyberattack that resulted in the theft of confidential information for over 515,000 “very vulnerable people” participating in the “Restoring Family Links” program.
This may not be a surprise with the number of delivery scams. DHL took over the number one spot in Q4 2021, replacing Microsoft as the brand most likely to be targeted by cybercriminals in phishing scams. FedEx also appeared in the Top 10 list for the first time in Q4 2021. 23% of all brand phishing attempts were related to the global logistics and shipping company.
Phishing scams continue to be an ongoing problem affecting both enterprises and consumers around the world. Even though companies have invested in numerous training programs for their employees on how to identify phishing emails and avoid them, many still fall victim to phishing scams.
Digital Fraud continues to rise – remote banking fraud up 53%
I picked up this release from TransUnion commenting on the ONS figures. The ONS figures are to September 2021 and reflect that total crime excluding fraud and computer misuse decreased by 14% compared with the year ending September 2019.
Estimates from the Telephone-operated Crime Survey for England and Wales (TCSEW) showed that there were 5.1m fraud offences in the year ending September 2021. This is a 36% increase compared with the year ending September 2019. This included large increases in “advance fee fraud”, “consumer and retail fraud” and “other fraud” and may indicate fraudsters taking advantage of behaviour changes related to the pandemic, such as increased online shopping and increased savings.
Fraud offences reported to the police are recorded and collected by the National Fraud Intelligence Bureau (NFIB) from Action Fraud and CIFAS and UK Finance. Action Fraud (the public-facing national fraud and cybercrime reporting centre) reported a 27% rise in fraud offences (to 413,417 offences) compared with the year ending September 2020. The data showed an 18% rise in “advance fee payments” (from 43,555 to 51,407 offences).
Crypto money laundering rises 30%
According to a report by blockchain data company Chainalysis, criminals laundered £6.4 billion of cryptocurrency in 2021, up by 30% from 2020. Chainalysis says it tracks cryptocurrency wallets controlled by criminals such as ransomware attackers, malware operators, scammers, human traffickers, dark net market operators and terrorist groups.
The scale of money laundering is eye watering.
Ombudsman News 168
The FOS plans and budget consultation for 2022/23 is closing on 31 January 2022. I have covered above the focus on FCA rule changes in the insurance sector and the potential impact of Michael Gove’s intervention in multiple occupancy properties.
Credit-Connect Think Tank – 3/2/2022 – Affordability and Vulnerability Assessments
Vanessa and Colin have taken us through rehearsals this week and I am looking forward to next Thursday at 11:55. Also looking forward to hearing about local authority collaborations with contributions from Mid-Sussex District Council and TellJO.
The LinkedIn debate goes on in terms of good examples in this space.
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