Credit Management December 2022

CONSUMER CREDIT
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AUTHOR – Sean Feast FCICM
“In many respects, and notwithstanding the areas of ambiguity, our markets
are well placed already to apply the Consumer Duty”
– Henry Aitchison, Head of Policy at the Credit Services Association
believes its own approach achieves a better
outcome. Due diligence in the purchase
of portfolios will be largely unchanged,
but the Consumer Duty should in theory
make that slightly easier by requiring
vendors to provide adequate information
– an incremental improvement. Other
aspects will be entirely new, such as
not merely tracking whether a customer
was referred to debt advice but what
the outcome of that referral and that
advice was. How those affect markets or
competition are as yet unclear.”
and a solid Quality Assurance model, so
the practical impact on Ardent will be
minimal,” he explains.
“A number of policy items/governance
documents and objectives mapping tools
are being updated and enhanced together
with more detailed compliance checks
and records of specific ‘validations’
although as a DCA we don’t of course
actually offer any ‘retail’ goods or services.
Our main focus remains ‘clear and not
misleading communications and NOT
exploiting a lack of understanding’.
So how will the new duty affect the
marketplace? Will it increase competition?
Henry thinks it is still too early to tell:
“There will be an element of seeing what
the impact is in client sectors before
forming a view of how that might translate
into influencing debt purchase and
collection markets. In many respects, and
notwithstanding the areas of ambiguity,
our markets are well placed already to
apply the Consumer Duty,” he says.
“Some challenges can be expected to be
largely unchanged, such as different client
demands or managing the tension between
those and situations where the debt collector
Cost implications
Debbie Nolan thinks that one of the
impacts could be the additional cost: “I
don’t want to label this as just another
compliance exercise – it’s not just ‘TCF+’
or an enhanced set of ‘tick-boxes’ to
complete, this is all about how a firm’s
culture and values stack up and how
everyone in that firm believes in treating
customers and helping them deal with
their financial difficulties. But I think for
some firms that have work to do in this
area, there will be a cost to bear.
“One of the FCA’s key goals is to maintain
a competitive marketplace – if the cost of
achieving the standards expected by the
regulator are perceived to be too high,
some products may be withdrawn from
the market and that may not benefit the
consumer. In time, however this initiative
should improve competition as customers
will recognise those suppliers that provide
the very best service to consumers – I’m
sure the FCA is trying to generate a ‘race
to the top’ and that can’t be a bad thing for
the consumer.”
Kevin Blake agrees: “It will certainly
raise standards both in respect of the
way our clients expect us to operate and
in turn we shall enhance the diligence
processes associated with portfolio
purchases. By getting it right, this can
create a competitive advantage in the eyes
of our clients as well as ensuring financial
objectives of our customers are met and
thereby making credit work better for all.
“Anything which raises standards
in the sector does, by its very nature,
increase competition but like many
regulatory changes it is likely to come
at an incremental cost which could
cause challenges in some parts of
our marketplace.”
Brave | Curious | Resilient / www.cicm.com / December 2022 / PAGE 15