Industry Thoughts

The Financial conduct Authority (FCA) has a pivotal role when it comes to the granting of consumer credit to individuals. Principally it is an organisation which regulates lenders, their agreements and everything to do with credit. Its tentacles are spread far and wide. But first and foremost its regulations focus on the protection of the hapless “customer”, or individuals, to whom credit is granted. The new Consumer Duty, (see “The new Consumer Duty: Why all the fuss?”) is the latest manifestation of this. Anyone involved with credit lending will be familiar the FCA’s Handbook which details (amongst other topics) High Level Standards; Regulatory Processes; Redress and a plethora of guides and guidance. Not least amongst these is the “Consumer Credit Sourcebook” which is the specialist sourcebook for credit related activities. So we are no doubt all alarmed to learn that the FCA is under attack from scammers who are impersonating the Authority. This is perhaps no surprise when one considers that last year it was reported that in the UK a staggering 41 million people were targeted by bogus calls, texts and emails. According to the bank industry group, UK Finance, this equates to £2,300 per minute or £1.2 billion lost to fraud. In a report from the BBC (30th August 2023) “Thousands of Scammers Impersonate Finance Watchdog”, it appears that the regulator has been subject to a huge number of cheats pretending to be the regulator. These fraudsters ask individuals for their financial details such as their bank accounts particulars, including PINS and passwords. The incentive to pass on this information is that the individual will receive compensation for some fictitious calumny committed by a regulated credit provider. The bank details are needed, of course, to facilitate payment of the fictitious compensation. The FCA has given sage advice should anyone be contacted offering compensation by an organisation claiming to be with Authority, including: The FCA will never contact people for their bank details Concerned individuals can contact the Authority by phone If someone receives a call, text or email claiming to be from the Authority suggesting that they are entitled to compensation then if called they should hang up the phone or ignore any other type of communication Often tell-tale signs of impersonation include a text or email containing poor spelling or grammar. Presumably, the more savvy and alert consumer will be aware of this. Perhaps the greatest protection will come once the UK introduces a ban on the cold calling of all consumer and financial service products. The government has said that such a blanket ban on cold calls will cover legitimate calls too. The precise products to be covered by the ban will be decided upon after consultation. An advertising campaign will be introduced to warn people about the risk of scams and a new fraud squad established with 500 staff, up from the current 120. At the risk of being cynical, devious fraudsters may still be able to find some way of navigating  around such obstacles, particularly if …

In September 2023, the Financial Conduct Authority (FCA) published a consultation paper (“CP23/21”) entitled, “Consumer Credit – Product Sales Data Reporting”. WHAT? Under this consultation, the FCA “seeks views on our proposal to introduce three new Product Sales Data (PSD) returns into Chapter 16 of the Supervision manual (SUP 16).” It adds that the returns “will allow us to collect further data about the consumer credit market from providers of consumer credit products”. The three new returns are: Sales PSD, Performance PSD, Back book PSD. The consultation consists of 40 pages of commentary, and 80 pages of draft handbook text. The proposals represent a sea change in the FCA’s approach to data, from mainly collecting aggregated data, to requiring firms to provide very detailed data relating to credit decisions (whether resulting in an agreement or not), the sales process, affordability assessments and in-life performance at an individual agreement level. The FCA intends that collecting such data will enable them to make, “quicker, bolder decisions”, support in their authorisation and supervisory activities and give them a greater understanding of, and ability to, monitor risks in the market and identify harms. WHO? The proposed new requirements will impact all lenders in respect of “relevant regulated consumer credit agreements”, if they have reported more than £500,000 either in outstanding balances at the end of the previous annual reporting period, and/or more than £500,000 in new advances. This is a fairly low threshold and by the FCA’s own estimate 749 lenders will be in scope of which 607 (81%) will be small firms. WHEN? Responses to the consultation paper were required by 15th November 2023, and the regulator proposes that the new requirements will apply from 1st January 2025. The proposals stipulate that reporting will be due within 20 business days of the end of the reporting period for ‘sales’, within 30 business days for ‘performance’, both to be reported on a quarterly basis, and that back book data will be required as a one-off submission, all via RegData. IMPACT? The FCA acknowledges that “there will be costs to firms in collecting and reporting the enhanced data to [the FCA]”. Throughout CP23/21, the FCA is keen to emphasise that the new rules are intended to be balanced between the FCA’s objectives and the burden on firms to comply with the data reporting; and a cost benefit analysis is included at Annex 1 of the consultation. The regulator anticipates the average cost to firms to implement the reporting to be between £80,000 and £138,000 as a one-off and an average ongoing cost of £2,000 annually (anticipated as up to £20,000 for large firms). Further, the FCA states that there should be a longer-term benefit to firms in the FCA shifting from ad-hoc information requests to scheduled operational reporting. Such a shift in approach is to be expected, particularly in light of the FCA’s focus on becoming “a data-led regulator”. However, firms, advisers and industry bodies are expressing significant concerns about the enormous volume of data …

Motor insurers selling GAP policies will find the recent FCA study and publication particularly significant. In a letter to insurers, the FCA warned, more action was needed to guarantee positive consumer outcomes, especially considering new Consumer Duty. A reminder was sent by the FCA to all insurance companies outlining its expectations to ensure products offer fair value to their customers as they found evidence that some GAP products might be failing in this area. The FCA released its most recent insurance Value Measures Data (Jan-Dec 2022), which has brought to light potential concerns regarding the value of GAP products for customers. Based on this data, it is evident that only 6% of premiums paid by customers for GAP insurance are actually paid out in claims. Furthermore, the FCA has identified instances where certain firms have allocated as much as 70% of the insurance premiums’ value in commission to parties within the distribution chain, including motor dealerships. GAP insurance providers have been instructed by the FCA to demonstrate that their customers are receiving equitable treatment. Failure to do so within three months will result in intervention by the regulatory body. Matt Brewis, Director of Insurance, FCA said: ‘This is an early signal of the work we’ll be doing under the Consumer Duty. ‘Customers should be reassured that we’re in their corner and are taking action where we see poor value being provided…If the firms are unable to prove they’re providing fair value to their customers, they should expect further action from the regulator.’ In 2021, insurers were required to guarantee fair value in their products, necessitating the submission of periodic Value Measures Data to the FCA. The most recent publication of this data is now available. Please see the latest insurance Value Measures Data. Over the past year, the FCA has implemented supervisory measures against companies that have demonstrated the following: the continued sale of products not providing fair value paying significant amounts of commission to third parties where it was not clear how those commission levels had been assessed as being consistent with fair value discriminatory pricing practices undervaluation of motor claims failure to implement general insurance pricing practices rules weak identification of vulnerable customers poor business interruption claims handling instances of very long waiting times/settlement delays. The FCA confirmed in their Dear CEO, Insurance Market Priorities 2023-2025 that firms should enhance efforts in effectively showcasing the delivery of fair value, encompassing the justification of prices and commission levels. They also confirmed they will intervene to ensure their objectives are achieved in cases where firms do not meet expectations.

Motor finance lenders could be forgiven for feeling under the spotlight from the Financial Ombudsman Service, Claims Management Companies, claimant law firms and the Court. James Dipple-Johnstone, Deputy Chief Ombudsman, said at a conference that they had 9,000 motor commission complaints. There’s seemingly no sign of it slowing, so where are we at? THE OMBUDSMAN There are four key developments: Expectation letters have been issued to lenders and professional representatives. A blog has been published on motor commission complaints. Re-organisation of teams into specialist teams (including a team dealing with irresponsible lending and motor commissions) for consistency and operational efficiencies. Adjudicator decisions have been issued to firms generally upholding complaints where there’s is a discretionary model (based on purported breaches of CONC 4.5.2G and Principle 6). But we’ve not seen any final decisions yet. We suspect the drive by the Ombudsman Service is to get more lenders into a similar position (an adjudicator decision and detailed submissions in response). The aim of such approach may be to reduce the risk of a successful judicial review of any final decision. But given the focus on motor commissions, we expect a final decision soon. COUNTY COURT The Ombudsman Service’s position can be contrasted with the Court’s position. In our experience of acting for a number of motor finance lenders, it seems lenders are generally winning around two thirds of claims which go to trial. Seemingly Courts are more likely to dismiss a claim where commission was fixed. But even where the Court has found in a customer’s favour, we’re not aware of the Court awarding rescission. Instead, the Court will often award (at the most) the commission plus interest. BARINGS – ‘GROUP’ CLAIMS IN BIRMINGHAM So far, there’s no binding decisions from the Court on motor commissions. However, Barings Limited have brought claims against eight lenders for multiple claimants (one lender having nearly 2,000 claimants). Barings applied for (a) the claims to be transferred to the High Court and (b) for them to be managed together with lead or test cases. The Court dismissed both applications so (subject to any successful appeal) the claims remain in the County Court, will be split up and transferred to the relevant County Court hearing centres. This means those cases will now process in the normal way. WHAT’S NEXT? With no binding decision from the Court, any final decision from the Ombudsman Service or any public announcement from the FCA, the status quo is likely to remain for now with lenders robustly defending their positions. However, we expect there will be some developments in around six to twelve months which should clarify the position.

When exploring how to maintain collection rate efficiency, businesses can be overwhelmed with challenges. For many, limited payment options, shifting consumer behaviour, and the economic impact on payment habits are prominent stumbling blocks. Let’s explore these difficulties and how Payment Solutions Providers (PSPs) can support businesses in improving collection rates and streamlining the payment journey. DATA When payments are unsuccessful, businesses often find themselves in the dark, unsure of why the transaction failed or how to rectify the problem. This can lead to a frustrating and time-consuming process for both businesses and customers. By partnering with PSPs who provide comprehensive data analytics on customer payments, such as payment decline codes, businesses can gain deeper insight into the reason behind unsuccessful collections. A data-driven approach enables businesses to identify the root causes of payment issues and implement strategies to boost success rates. CONSUMER BEHAVIOUR AND PREFERRED PAYMENT OPTIONS Customer payment method preferences are constantly evolving, and businesses must adapt to these changes – understanding how customers prefer to make payments is crucial for optimising collection rates. Limited payment options can be a significant barrier to successful collections. Businesses can address this by partnering with PSPs who offer a variety of payment options. For example, offering Open Banking alongside traditional payment methods provides greater flexibility for customers, as well as boasting up to 97% authorisation rates for businesses, surpassing the rates of credit or debit card transactions. Partnering with PSPs who offer cost-effective Open Banking payments, alongside an array of other options, can be a key catalyst for businesses in streamlining their collection process. By staying attuned to customer behaviour and adapting to their needs, businesses can ensure a streamlined payment experience and ultimately improve collection rates. ECONOMIC IMPACT Changes in the UK economy have had a profound impact on how people make payments, with up to 95% of the population expressing their concerns about the cost-of-living crisis. Rising costs alongside economic fluctuations are influencing customers’ ability to make timely payments. Businesses should work with PSPs who can help them adapt to changing customer needs, such as using data to identify optimal times to take card payments. By doing so, businesses can adapt to customers’ evolving financial situations and maintain consistent collection rates by providing flexible payment methods. FINAL THOUGHTS By understanding transaction data, offering an array of payment options, and adapting to changing payment method preferences, businesses can embrace solutions that enhance collection rate efficiency. Be sure to speak with your existing PSP to dive into the aforementioned strategies, or connect with key partners in the ecosystem who offer a tailored approach to payment solutions.

Automation has become an integral part of nearly every facet of our lives. One area where automation is making significant strides is in the realm of the Consumer Duty. Automating these responsibilities not only enhances the customer experience but also brings a multitude of benefits to businesses. AUTOMATION IS CHANGING THE CONSUMER DUTY LANDSCAPE The introduction of the Consumer Duty by the Financial Conduct Authority stands out as the most substantial regulatory overhaul in the last two decades, signifying a fundamental shift in consumer protection standards. This innovative framework mandates financial institutions, encompassing banks, insurers, and investment firms, to prioritise delivering favourable outcomes for their customers and actively prevent foreseeable harm. These regulations require companies to provide clients with clear, understandable information, offer products and services that genuinely benefit them, and provide support when required. With a strong emphasis on responsive customer service, the ultimate objective is to ensure that using a product, resolving an issue, or exercising the right to switch or cancel is as smooth as the initial purchase. The advent of the Consumer Duty is poised to revolutionise the financial services landscape, reshaping how businesses interact with their customers and paving the way for an ethical and customer-centric industry. THE KEY TO SUCCESS Going beyond the realm of obligatory regulation, a conscientious embrace of the Consumer Duty, further optimised through automation, can produce significant advantages for financial institutions. This approach not only upholds their reputation but nurtures enduring customer loyalty and stimulates economic expansion. Clients who experience authentic support during trying circumstances are more inclined to become loyal patrons, rendering it a strategic necessity for banks and lending institutions to incorporate these principles. THE RIGHT SOFTWARE IS ESSENTIAL The implementation of the Consumer Duty measures hinges on the discovery of the appropriate financial software solution that automates and simplifies consumer-oriented processes while enhancing cost efficiency by reducing time spent on manual tasks. Given the firm establishment of the Consumer Duty, businesses are compelled to explore software solutions that come equipped with the essential features for regulatory adherence. The pivotal factor is adaptability, enabling companies to customise payment arrangements and decision criteria to match the unique requirements of each customer. This guarantees that the customer remains the focal point of every business decision. The Consumer Duty is not just a regulatory obligation; it’s an opportunity for financial institutions to create a brighter future for themselves and their customers. By embracing these principles and harnessing the power of automation, institutions can safeguard their reputation, foster loyalty, and contribute to business growth. In this new era of responsible banking, it’s not just about compliance; it’s about redefining the relationship between financial institutions and the people they serve.

Artificial intelligence (AI) is set to shake up the car buying process. With AI at your side, get ready to increase sales and improve operational efficiencies across your business.   CHAMPION YOUR ONLINE OFFERING Marsh Finance spoke to three of our partners, who overwhelmingly agreed that customers now favour online car purchases versus in-store, with some purchasing a car without even viewing it. AI can help you deliver on this rising customer preference, through fully automating the customer journey. Customers can engage in genuinely lifelike conversations with artificial intelligence through chatbots and virtual assistants, taking customer experience to unparalleled levels. PREDICT CUSTOMER TRENDS AND BEHAVIOURS The ability to meticulously track and decipher buyers’ ever-evolving patterns and behaviours, thus facilitating customer segmentations, serves as the gateway to unlocking unparalleled revenue growth and operational efficiencies. Simultaneous data analysis and tracking can bring vital information to car dealerships, which can be used to drive sales and inform future marketing decisions. OVERHAUL OF YOUR CRM Automation is the future, and AI provides the means to champion automation. Daily, it’s easy to feel overwhelmed with admin tasks. By adopting AI, you can create automatic replies to emails and automate operational processes. A survey undertaken by People.ai in conjunction with Harvard Business Review found that one company saw a 15% increase in bookings per sales rep after automating manual Customer Relationship Management data entry. Cutting through the manual processes and replacing them with AI could transform your business’s efficiency. HOW TO GET STARTED Here are some tips to get started with using AI in a car dealership: Define your objectives: Determine your specific goals and objectives for implementing AI in your dealership. Whether it’s optimising sales or enhancing customer experience, having clear objectives will guide your AI integration strategy. Assess your data infrastructure: Evaluate your existing data infrastructure and ensure it can support AI applications. Identify the data sources available, such as customer data, sales records, service histories, and website interactions. Start small and prioritise: Focus on a specific area where AI can deliver immediate value. Starting small allows for more straightforward implementation and showcases tangible results. Explore AI solutions and partners: Look for reputable vendors or partners specialising in AI for the automotive industry. Assess their expertise, track record, and the suitability of their solutions to your dealership’s needs. Train and educate your team: Provide training and education to your staff to foster AI adoption and ensure smooth integration. Embracing AI is an iterative process. Start with small steps, learn from the outcomes, and continuously refine your AI strategies based on feedback and insights gained along the way.

Navigating the dynamic consumer credit landscape requires more than just adequate information. It calls for in-depth insights into regulation and innovation, paired with a strong understanding of the consumer and their circumstances. THE REVOLUTION OF OPEN BANKING AND THE RISE OF CONSUMER-CENTRIC STRATEGIES Open Banking is pivotal in recent technological advancements, revolutionising lending by enhancing transparency, improving risk assessment, and delivering much more personalised products and services. Technology is vital in helping financial institutions adhere to the FCA’s new Consumer Duty. With millions of customer interactions, technology, such as AI analytics, automates compliance monitoring, detects vulnerable customers, provides real-time guidance to agents, improves efficiency, and allows continuous refinement of processes. It can ensure fair treatment of customers and help organisations meet regulatory requirements effectively and confidently. QUALCO’S INNOVATIVE APPROACH QUALCO is dedicated to delivering AI-driven solutions that modernise and enhance credit and financial operations. We are committed to pioneering the economic future by tapping into the power of technology, data and industry expertise. Central to our efforts is QUALCO 360, our suite of pre-built systems designed for managing Performing Loans, Non-Performing Loans, Non-Performing Exposures, and credit portfolios. Enriched with analytics, machine learning capabilities, and digital engagement tools, our constantly expanding solutions ecosystem enables businesses to swiftly adapt their operational activities to meet the ever-changing demands of customer behavior. QUALCO 360 helps manage debts and payments across all sectors, including banking, retail, utilities, and various businesses. It covers the entire credit process, from regular payments to early missed payments and legal actions for recovery, for both secured and unsecured loans.

After conducting vehicle provenance checks for the last twelve months, we found over 600,000 vehicles advertised on Auto Trader which already had a live finance agreement. Were your vehicles in that list? Are your assets protected? If your data isn’t on our database you are exposed to greater risk. Over a twelve month period we looked at private and trade adverts and found that, across 240 lenders, over 600,000 vehicles that were still in finance agreements. This sample was for less than one tenth of the whole finance industry, suggesting an even bigger problem throughout the sector. At Auto Trader, we are surfacing existing finance agreements to potential buyers to avoid conversion fraud, but if your data isn’t on our database this information won’t be provided. To avoid the costly and time-consuming processes of repossessing the vehicle or outstanding funds, simply contact Auto Trader to set up a data supply feed today. The process is simple and free of charge. We can accept data from your preferred agency (i.e., HPI), meaning little work for you. The threat of conversion fraud is real and can result in: loss of assets loss of income wasted compliance team time Avoiding this risk is vital for any small business. We’re here to help. Contact us today by emailing karan.ridgard@autotrader.co.uk.

Digitalisation of operations is not a black and white solution, and there will always be a need for human interaction which is crucial for businesses to manage debt and arrears conversations. However, automation of processes can reduce costs, and it can positively enrich the relationship you have with your customers and provide them with more confidence to have a meaningful interaction with your business. Advantages arise on the company’s side and on the customer’s side. PROS FOR COMPANIES • Cost and Time Savings: Self-service solutions streamline processes, reducing operational costs and freeing up resources for more valuable tasks. • Improved Efficiency: Automated self-service platforms allow for faster and more efficient handling of customer requests, leading to increased productivity. • Data-Driven Insights: Self-service systems generate valuable data that can be analyzed to gain insights into customer behavior, preferences, and trends, enabling better decision-making and targeted marketing strategies. • Scalability: Self-service options can easily accommodate a growing customer base without requiring a proportional increase in staffing or infrastructure. PROS FOR THE CUSTOMER • Convenience and Accessibility: Self-service options provide customers with quick and easy access to the services they need, anytime and anywhere, without the need to wait for assistance. • Empowerment and Control: Self-service puts customers in charge of their interactions, allowing them to manage their needs independently and at their own pace. • Faster Resolutions: With self-service, customers can find answers to their queries or resolve issues more swiftly, without the need to wait for a support agent’s availability. • Personalization and Tailored Experiences: Self-service platforms can leverage customer data to deliver personalized recommendations and solutions, enhancing the overall customer experience and satisfaction. Aryza, the market leader in process automation, launched Aryza Recover as a digital response to COVID-19. This tool aids customers facing payment difficulties by suggesting alternative solutions like ‘breathing space’ or debt management. It enables businesses to assess customers’ ability to pay and propose suitable options. Businesses have embraced self-service solutions for managing debt, maintaining personalized experiences. Surprisingly, 65-80% of consumers using self-help methods set up payment plans. However, some customers prefer agent assistance, necessitating systems that offer the same benefits. Personalized customer service focusing on individual needs is crucial. For self-service customers, Aryza offers a hybrid “agent-assisted” approach. Consumers transition into agent mode when struggling, flagged as vulnerable, or desiring human interaction. Automated solutions outperform traditional debt collection methods, with over 30% of consumers engaging and 20% making payments when four or more payments behind. In the current era, digital systems combine efficiency, intimacy, and operational automation, preserving customer relationships. Integration is quick, achieving significant cost savings while maintaining customer satisfaction.

Dealing with debt can be an overwhelming and stressful experience for many people. In December 2020, as we all know, the Financial Conduct Authority (FCA) proposed a new set of rules called the Consumer Duty, with the aim of bolstering consumer protection and promoting responsible practices in debt collection. The new Consumer Duty purpose was created to reshape the relationship between firms and consumers, ensuring fair treatment and empowering consumers to make informed decisions throughout the collections process. Let’s look at the three core elements of the Consumer Duty: 1. Duty of Care: Debt collection companies and teams are obligated to act in the best interests of consumers, taking reasonable steps to prevent harm. Understanding consumers’ circumstances and vulnerabilities becomes crucial, emphasising empathy and respect. 2. Duty of Exercise: Skill, Care, and Diligence: Individuals involved in debt collection should possess the necessary skills and knowledge to provide appropriate advice and support. Consumers must be well-informed about their rights, repayment options, and the consequences of their decisions. 3. Duty to Communicate Clearly and Transparently: Clear, fair, and non-misleading communication is essential. Debt collection agencies, purchasers, and internal functions should present information in a manner easily understood by consumers, avoiding jargon and complex terminology. Explaining fees, charges, and repayment options clearly enables consumers to make informed choices. The introduction of the Consumer Duty holds significant implications for debt collection companies and teams. Here are key aspects we need to consider: 1. Consumer-Centric Approach: Shifting the mindset to prioritize consumers’ best interests, considering their circumstances, vulnerabilities, and affordability. This approach encourages fair treatment and empowers consumers to make informed decisions about their debts. 2. Improved Training and Processes: Investing in training programs to ensure staff members possess the necessary skills and knowledge to comply with the Consumer Duty. Implementing robust processes to identify and address consumers’ vulnerabilities appropriately. 3. Enhanced Communication Practices: Clear and transparent communication is vital. Debt collection interactions should use plain language, avoiding technical jargon that may confuse consumers. Providing accurate and understandable information about debts, repayment options, and consequences is essential. 4. Adapting to Vulnerable Consumers’ Needs: Proactively identifying and supporting vulnerable consumers, rather than reactively. Establishing mechanisms to assess vulnerability and provide appropriate assistance, treating individuals with sensitivity and compassion. In conclusion, the FCAs Consumer Duty represents a significant step forward in regulating debt collection companies and teams. By prioritising consumer interests, clear communication, and responsible lending practices, the Consumer Duty aims to ensure fair treatment and protect consumers in debt. This introduction reinforces the importance of empathy, transparency, and accountability in the debt collection process, ultimately leading to better outcomes for consumers in need of assistance.

Financial services institutions, like many other businesses outside of the sector, continue to rely on cloud-based solutions to drive efficiencies, streamline processes and improve customer experience. This is despite lingering cybersecurity and data privacy concerns that are rooted in the resilience of such tools (and potential consequences if they were to fail). This risk inherent in swathes of individual’s data sitting on third party – often overseas – databases remains undoubtedly at the forefront of regulators, both here in the UK as well as on the continent. Hot on the heels of the Digital Operational Resilience Act in the EU, further developments look to be in the horizon domestically with lawmakers setting their sights on the ‘critical third parties’ (that supply cloud services to financial services firms) in particular. And yet, adoption of cloud technologies remains almost a necessity in retaining efficiency of service. We’ll be keeping a close eye on this space over the next twelve months, but as the legal landscape continues to unfold here are a few issues for financial service companies looking to move to cloud based solutions to bear in mind: DUE DILIGENCE IS KEY Undertake detailed DD on data security, control and exit. Consider the nature of the data set and any specific form you may need it in on exit. When it comes to termination, it pays to agree that post-termination support will be provided (even if there is an agreed cost for it). PICK THE RIGHT BATTLES IN THE CONTRACT NEGOTIATION Though standard does not necessarily mean “fixed”, expectations need to be realistic when it comes to negotiation (services are largely standardised and, as such, providers need to maintain a consistent risk profile across their platform). That being said, suppliers will countenance movement of termination rights for default, enhanced service credit regimes and increased caps for data breaches, especially where customers are paying for an enhanced / premium” service package or paying for additional levels of support. OBTAIN COMMITMENTS ON INFORMATION SECURITY STANDARDS A key selling point for providers is the operational security their system offers; that being the case, ask for it to be warranted. BE PROACTIVE AROUND BCDR Test and document operational resilience plans, outlining the steps your business has taken to ensure security of the data that is being processed by the cloud provider, the alternative providers in event of failure and the steps that would need to be taken on termination of the arrangement. Ensure that any providers have similar business continuity / disaster recovery plans in place and get contractual commitments that back them up where possible.