That was an interesting session at UKCCC run by the CSA this week. It was of course great to get out of the office and meet up in person, be it grabbing a coffee, swapping stories on the holidays or indeed meeting biscuit commitments following the CSA supplier webinar.
However there was some work done too, and I have posted below some of the key themes, bullets and take aways from the day.
Key headline themes
- Still no reports of significant arrears levels increasing across the industry as yet. This remains a puzzle given the current economic context of high inflation and rising cost of living
- Technology, AI and Digital approaches are showing some great promise, offering additional richness of data to guide support and services for customers and help manage cost
- Consumers continue to have a high degree of resilience following the pandemic, which is believed to be helping many weather the storm of inflation. This varies widely by demographic segment however
- Some interesting data from the CSA from consumers in debt and their attitude to debt collections activity. Chris Leslie, teased us with some early results, however there is more come from this research, which will be interesting to review, for members.
- The FCA was complimentary of all the work that has been done in debt collections and financial services space around treatment for financial difficulties and vulnerability. There is however more to do, and they are starting to set expectations and re-enforce requirements from the new Consumer Duty regulation.
- The emphasis was firmly on good customer outcomes and the FCA have already started to look at how duty is being implemented in some areas and provided a couple of additional guiding points
- Firms need to understand individual customer needs and offer tailored support and solutions. A one-size-fits-all approach will not work
- Communication with customers should be clear, avoid legal jargon, and provide the right information at the right time
- Vulnerable customers require special recognition and support. Firms need policies and training to identify and assist these groups
- Firms should be prepared to handle a potential increase in customers experiencing financial distress due to economic pressures
The FCA was keen to emphasise that both customers and firms have responsibilities in regard to debts. The regulator will take a balanced approach, however was clear it will enforce where harm is found. The Consumer Duty focuses on delivering good outcomes for customers and firms now need to embed this mindset in their culture and operations.
Statistics: Some of the key statistics noted from the sessions where i was able to attend
- Inflation has been very high but is starting to come down from over 11%
- 13 million people in the UK have low financial resilience
- 7 million have fallen behind on bills or credit payments
- 50% of adults are experiencing higher anxiety and stress due to rising costs
- 70% have seen their financial situation get worse in the last 6 months
- 50% have stopped or reduced savings
- People are eating out less, spending less on food and travel
- Energy costs are falling but will remain higher than previous years
- The Bank of England has raised interest rates sharply to combat inflation
- Potential still for a recesssion
- AI is being used by 68% of large companies and 33% of enterprises, but only 15% are using AI effectively
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