DEMSA Summary: FIN073 / PS24-2 / AI / Collaborations / Events

Summary – Find the full update here (including all the links & more)

This week’s bulletin discusses significant developments such as new policy rules to protect borrowers in financial difficulty, the reinforcement of financial and operational resilience among firms, and evolving data protection standards affecting the use of AI in financial practices.

Key Points

PS24/2 Policy Rules Introduction: New rules effective from November 2024 aimed at strengthening borrower protections in financial distress.
Financial Resilience Focus: FCA’s emphasis on maintaining financial resources and operational resilience, especially highlighted in the motor finance sector.
SUP15 and FIN073 Reporting Requirements: Updated reporting standards require firms to maintain transparency and compliance rigorously.
Credit Conditions Survey Q1 2024: Insights into the stability of credit availability and increasing default rates.
ICO’s AI Accuracy Consultation: A call for inputs on how data protection’s accuracy principle should apply to generative AI models.
Common Financial Tool (CFT) Update: Revised guidelines for debt advisers in Scotland effective from April 2024.
Aryza and TransUnion Extend Partnership: A strategic move to enhance access to credit reports in Canada.
Virtual Event on IVA Voting: Scheduled for 1 May 2024 to discuss improvements and sustainability in IVA voting practices.
Increasing Regulatory Scrutiny on Small Firms: Highlighting challenges small firms face under growing compliance costs.
Data Protection and Compliance Costs: Discussion on rising costs associated with regulatory changes and compliance.
Impact of Consumer Finance on Firms: Survey results suggesting negative impacts on financial stability for many firms.
Virtual Events and Webinars: Opportunities for professional development and staying informed on industry changes.

Key Statistics

7.4 million: People struggling to pay bills as of January 2024, a decrease from 10.9 million in January 2023.
5.5 million: People reported falling behind on domestic bills or credit commitments in the last six months as of January 2024.
3,270: Respondents in the Consumer Finance group as part of an FCA survey.
47%: Adults who sought financial help and reported being in a better position afterwards.
Default Rates: Increase in default rates for total unsecured lending in Q1 2024 with an expectation to rise further in Q2.

Key Takeaways

The introduction of PS24/2 policy rules signifies a shift towards more robust protections for consumers in financial distress, demanding adjustments in debt recovery practices.
Maintaining financial and operational resilience is more crucial than ever, as highlighted by the FCA’s recent warnings and directives, especially concerning motor finance firms.
Compliance with new reporting standards (SUP15 and FIN073) is essential for firms to navigate the increased regulatory focus effectively.
Understanding the credit market dynamics through regular surveys like the Credit Conditions Survey helps firms prepare for potential shifts in credit risk and consumer behavior.
Engaging with consultations on the accuracy of AI models in data processing is vital for ensuring compliance with evolving data protection standards.
Implementing updates to the Common Financial Tool in Scotland is necessary for advisors to remain compliant and effective in debt management practices.
The extension of Aryza’s partnership with TransUnion into Canada exemplifies the importance of strategic alliances for better data accessibility and decision-making in credit management.
Virtual events offer invaluable opportunities for continuous learning and adapting to new regulations and market conditions.
Small firms must navigate the increasing complexity of compliance, which could disproportionately impact their operations and financial health.
Rising compliance costs underscore the need for efficient operational practices to sustain profitability amid regulatory changes.
The negative impacts of consumer finance on firm stability underline the necessity for a balanced approach to financial product design and consumer protection.
Professionals must leverage virtual learning platforms and industry events to stay abreast of regulatory changes and sector developments.