FOS consults on charging CMCs

Published 10 June 2024

A general election wasn’t the only announcement we saw in late May. The Financial Ombudsman Service (FOS) also published its next consultation on plans to move forward with charging professional representatives, including Claims Management Companies (CMCs), to access their service. We, along with many CCTA members, responded to the last consultation calling for action to be taken. The FOS are consulting on a £250 case fee charge for CMCs. If a CMC wins a case, that would be reduced to £75. If the CMC loses, the £250 would be used to reduce the lender’s fee. CMCs will be allowed three free cases a year, like all other financial services firms. The service remains free to those who bring their case directly to FOS as well as families and friends, charities, and voluntary organisations who may be helping them. We welcome plans to move ahead with charging CMCs but don’t see why they would be treated any differently from lenders. For that reason, we think the full case fee of £650 should be applied to CMCs when bringing a case to the FOS. We are supportive of the principle that there could be some form of discount in the fee if the CMC is successful in their case. Over the last two years, over 20% of cases referred to the FOS have been brought by professional representatives. Of these cases, fewer than 25% result in a different outcome for the complainant than they have already been offered by the responding firm. The consultation tells us that consumers achieve a better outcome when they complain directly, rather than using a CMC. (32% of consumers bringing their case without representation achieve a better outcome). Obviously, we want to address the unfairness of the system but hopefully improve CMC behaviour to deliver a better experience for consumers too. And there is also a role for the wider industry to play in educating consumers that they do not need a CMC to represent them. Where complaints are upheld, CMCs and professional representatives take a significant proportion of redress awarded to their clients. Consumers would keep the full value of any redress awarded if they brought the case to directly to the FOS. These companies can send in large volumes of cases with little prospect of being upheld and they are often poorly presented. This can have a significant impact on the FOS’s ability to help others who have come directly, and drives up the Ombudsman costs. For too long these firms have been able to submit claims of a poor nature, because win or lose the lender will have to pay the case fee. The CCTA has been calling for change over recent years with HM Treasury, the FOS and the FCA.  The introduction of a fee should act as a deterrent for firms to submit poor quality claims and reset the balance. We will be responding to the consultation and working with CCTA members on their responses. The consultation closes on the 4th of July. …

The general election and a possible change in government

Published 30 May 2024

On the 22nd of May, Rishi Sunak surprised most of the UK by calling a General Election to take place on the 4th of July. Much of the political world thought it would take place in the autumn, but there was a growing sense that this was as good as it would get for the Conservatives. Though polls can be misleading and often narrow as election day approaches, Labour has consistently been around 20 points ahead of the Conservatives. It seems unlikely that the Tories will feature in the next government. Labour looks likely to be at the head of the next government in some form, possibly with a majority, a minority, or a coalition arrangement.   What would a Labour government mean for the alternative lending sector? Labour has said very little that would worry or calm the sector. We believe they may attempt to get through this campaign by saying as little as possible. The more it reveals its policies, the more the Conservatives can attack. In the few relevant statements, they have picked up on concerns about Buy-Now-Pay-Later. After pointing out this government’s regulatory delays, we can assume that they will want to move quickly. They have also addressed concerns about access to credit as part of a wider discussion on financial inclusion. They may also consider introducing a Fair Banking Act that would require the High Street banks to either lend directly to unserved communities or provide funding to other lenders that serve those groups. This has had some impact in the US so they may look to replicate something similar. Elsewhere, Labour has been careful to welcome the changes brought by the Consumer Duty but joined others in criticising the FCA, where the regulator has been more aggressive. They have floated the idea of more scrutiny. Earlier this year, Labour published “Financing Growth”, outlining some of its plans for financial services. This was seen as an outstretched hand to the City. The party is keen to appear pro-business and shed the views of the Corbyn era in this election. At a high level, the paper called for growth and the need to increase international competitiveness, recognising the importance of the FCA’s secondary objective. The report also discussed the need to embrace innovation and fintech, such as AI and Open Banking, with appropriate protections for the consumer.   What does the election mean for the review of the Consumer Credit Act? The future of the current review of the Consumer Credit Act is uncertain. Work on the reform has been placed on hold as we enter the election period, and it’s unclear whether or when this might restart. Labour has previously said that the Act requires updating for the digital age, so they may well continue with the review, but the election will introduce more delay into the process.   What is happening elsewhere? Beyond the Labour Party, there has also been some relevant activity in Parliament. Before the election announcement, the House of Lords Financial …

Bank’s liability for customer fraud
Supreme Court gives its decision

Published 27 May 2024

The Supreme Court has given its eagerly awaited decision in the case of Philipps against Barclays Bank UK PLC. The litigation involved an “authorised push payment” (APP) fraud. In this type of dishonesty, the victim is persuaded to authorise their bank to send a payment to an account controlled by a fraudster. Many bank customers mistakenly think that a bank will always have a legal duty to refund them should this happen. However, the decision of this case illustrates that it will all depend on the circumstances surrounding the transfer. FACTS OF THE CASE Mrs Philipps instructed Barclays to transfer no less than £700,000 from her current account to bank accounts in the United Arab Emirates which were controlled by fraudsters. Attempts to have the funds returned to her were fruitless. THE LEGAL ARGUMENT Mrs Philipps argued that her bank were liable for the loss because they owed her a common law duty of care not to carry out her instructions if, as she alleged, the bank had reasonable grounds for believing that she was being defrauded. The Court of Appeal held that in principle Barclays did owe their customer a duty of care. Whether such a duty existed would depend upon the particular circumstances of the case which could only be determined if evidence was led. Reversing the Court of Appeal’s decision the Supreme Court held that even if the facts as stated were proved the bank did not owe such a duty. Mrs Philipps also advanced a contractual argument by focussing on the bank’s current account written terms and conditions as well as conditions implied by the common law. As far as the bank’s written terms were concerned, the Supreme Court held there was nothing in them to the effect that instructions should not be implemented where the bank had reasonable grounds for believing that their customer was being tricked into making such a transfer request. The court rejected her argument that no express term was needed. They did not agree that the bank’s duty was either recognised by common law or was contractually implied. In the court’s opinion such a duty would be beyond a bank’s usual obligation to its customer. On the contrary. In effect the court held that if a customer instructed a bank to make a payment transfer in the circumstances presented to them by Mrs Philipps then they would have a duty to implement the order. In so doing Barclays would be acting as Mrs Philipps’ agent and not have a duty to assess the transaction’s risk. The court differentiated Mrs Philiips’ position with the seminal 1992 Appeal Court’s decision in “Quincare”. In Quincare the bank’s branch had received instructions from the customer’s agent to make the transfer in circumstances where the bank had reasonable grounds for believing that the agent was defrauding their customer for the agent’s own benefit. In these circumstances the appeal court held that the bank should have not have acted on these orders because they would be unable …

CCTA comment on new report from Fair4All Finance

Published 23 May 2024

Commenting on Fair4All Finance’s new report “Access to credit & illegal lending”, the CCTA said: We welcome the publication of today’s report, which outlines the current state of access to credit for many and the impact of illegal lending. They are right to point out that the shape of the market is as important as its size. They are also right to say that the UK credit market is not functioning properly for lower income households, many of whom have lost access to credit. We have been trying to draw attention to these issues for some time, having seen the major contraction[1] in the alternative lending sector. This has pushed people to less desirable options. There needs to be more support for tackling illegal money lending, especially as criminals look to use digital channels to exploit more victims. There is also a need to increase legal options. For that reason, it is good to see that the report states that a refreshed high-cost credit market can provide access for some consumers. There is also recognition that community finance alone cannot fill the gap left by commercial lenders. The market needs a range of small and specialist lenders to meet demand and provide competition. One of the report recommendations is about the need for regulatory adjustments to improve the market. Fair4All Finance is calling for a rebalancing between customer protection and the need to provide access to credit. The regulator and industry must discuss how to achieve this to ensure access to legal, regulated credit for those who need it the most. [1] From being 4% of the outstanding consumer credit loans market in 2013, forms of legal, high cost credit reduced to under 0.3% by 2023 (Fair4All Finance). Industry estimates that this is a fall of about £3 billion.  

Treasury Committee looks at the issue of de-banking

Published 20 May 2024

Earlier this month the influential Treasury Select Committee published their report into SME Finance. The Committee contains MPs from across the House of Commons, representing all major parties. The report was commissioned to look at the recent experiences of small businesses. It was designed to consider the issue of access to finance and what else can be done to encourage business growth. The last few years have been tough for small businesses across all industries. Rising inflation has had a severe impact on costs, and a global pandemic changed things for everyone. That said, SME firms make a substantial contribution to the UK economy which should not be undervalued. For that reason, we cannot ignore that SMEs are struggling with narrow access to finance, in the face of these rising cost pressures and higher interest rates and are generally pessimistic about their ability to raise funds. Many report struggling to attract new investment for their businesses. The parliamentary committee found that small firms are being put off from innovating and growing by damaging financial regulations and inadequate support from banks. We are particularly interested in the issue of de-banking. Within the CCTA, we know that many smaller members have struggled with access to financial banking facilities. Pawnbrokers have had a particularly bad time with the issue of de-banking. Perhaps unsurprisingly, the Committee found that over 140,000 SME had their accounts closed last year. We know that access to investment and banking services are lifelines for any business. The Committee has recommended that any small business doing legitimate work should have access to a bank account. The Committee members heard that many accounts were closed because they fell into “undesirable” sectors. Pawnbroking was included here, despite being a service that has been provided for hundreds and years and helps those individuals that struggle to access finance themselves. As a result, the Committee is calling on the Financial Conduct Authority (FCA) to force banks to be more transparent about why decisions to de-bank businesses are taken. The FCA should also continue its work to better understand criteria for account closure. Committee members also believe the regulator should compel firms to send them the number of business accounts they’ve closed each quarter split by reason. The Treasury has assured the Committee that legislative changes will be introduced to crack down on the de-banking of businesses in the form of a Statutory Instrument. When questioned, the Economic Secretary Bim Afolami MP, and Treasury officials, said that the planned changes to termination rules would apply to business accounts. The plans also include extending notice periods to 90 days and having to give a clear reason for closure, except where it would be unlawful to do so. The Treasury is expected to publish regulations soon. It is good to see the Treasury Select Committee shining a light on these issues. The CCTA will engage with Treasury officials at our regular meetings to ensure the publication of the new rules is not delayed. If members have had …

Out with the old
A review of the Consumer Credit Act

Published 20 May 2024

The Consumer Credit Act of 1974 covers all credit agreements in the UK, from credit cards to personal loans. There are few households across the country that will not hold some form of agreement that falls under it. At the point of creation, to provide protection to consumers, the Act was and continues to be very prescriptive about what lenders can and cannot do. There are strict rules about consumer rights and what must be communicated with the customer. It still predates much of the current system of financial services regulation. Fifty years on from its introduction, the credit market has changed dramatically. The advent of online lending and the exit from the European Union mean some of the rules no longer make sense or just don’t work with new developments. It is not surprising then, that for some time, there have been calls for this somewhat outdated piece of legislation to be reviewed. Finally, in the winter of 2022 the Government issued a consultation, seeking views on how to reform the Act. The Government outlined its intentions, which seek to improve access to credit and increase consumer protection in a digital economy. A response to that consultation followed last summer including next steps. The plan is for much of the Act to be transferred over to the Financial Conduct Authority (FCA) Handbook. The aim of this is to allow the regulator to quickly respond to emerging developments in the consumer credit market, rather than having to amend existing legislation which can be onerous and requires parliamentary time. And there are benefits that this style of reform would bring. Hopefully changes will mean that consumers are less confused by the information lenders must provide. We often hear reports of customers questioning why they have been contacted when they requested not to be or that they don’t understand the jargon they have received. The new system should also grant credit providers more flexibility. The regulatory burden might be reduced too and may lead to some cost savings. However, recent experiences in alternative credit, mean we as an association, have reservations about much of the Act transferring over to the FCA Handbook. There are concerns that this will leave future regulation further open to interpretation by the FCA and the Financial Ombudsman Service (FOS) in the future. Since responsibility for regulation transferred over to the FCA, and with that the removal of rule-based regulation, we have seen the publication of short principles that are then developed and interpreted by FCA officials. The results are not always consistent and interpretation from the FOS adds a further layer of complexity, especially when rules have been applied retrospectively in some cases. At a time when the Consumer Duty is also being introduced, providing a further regulatory tool for the FCA to use in their assessment of compliance, concerns us that it may become more difficult and confusing for firms to understand regulatory requirements – or for the regulator to quickly move the goal posts. The …

Litigation funding
Post-Paccar legislation to be introduced

Published 13 May 2024

The government has recently announced that it will introduce legislation to reverse the Supreme Court decision in PACCAR Inc & Ors v Competition Appeal Tribunal & Ors [2023] UKSC 28. The PACCAR decision reverberated throughout the litigation funding industry when it was handed down, as it held that litigation funding agreements (LFAs) where the funder is to receive a percentage of the damages should be properly classified as agreements falling within the statutory definition of damages-based agreements (DBAs). As such, LFAs were required to satisfy the statutory conditions for DBAs under the DBA Regulations 2013 failing which they would be unenforceable. Many LFAs in existence at the time were non-compliant with the DBA Regulations 2013 and were therefore unenforceable and urgent steps had to be taken by the stakeholders involved to shore up the position, often by the introduction of a multiple of funding rather than a percentage of damages. Litigation funding is not only suitable for high value claims but can be used for smaller claims as part of a class action. Where the loss suffered by any single claimant is too small to make individual claims economically viable, pursuing claims on a collective basis brings economies of scale. The press release refers to the role litigation funding played in supporting the high profile group claim against the Post Office which in 2019 exposed the Horizon IT scandal, which saw 900 sub-postmasters prosecuted on the basis of information provided by the faulty Horizon accounting system. It has been reported that although litigation funding was vital to the bringing of the sub-postmasters’ claim, that its effect meant that the sub-postmasters each only received approximately £20,000 damages, a fraction of the total damages awarded. The stated aim of the proposed legislation is to make it easier for members of the public to secure the financial backing of third parties (litigation funders) when launching complex claims against corporations with sizeable legal teams which they could otherwise ill-afford. Currently we only have the wording of the press release itself to guide us as to what the proposed legislation is likely to contain and it is stated that it will restore the position that existed before the Supreme Court’s decision in PACCAR last year, which may well mean that there is no requirement to comply with the DBA Regulations 2013 so that once the legislation is implemented, cases will be able to continue being funded as previously. No exact details of the legislation have been released as yet, only an indication that the legislation will be introduced shortly. The press release does state that the government is also considering options for a wider review of the sector and how third-party litigation funding is carried out more generally. This may involve consideration of whether there is a need for increased regulation or safeguards for people bringing claims to court perhaps limiting the amount funders are entitled to, particularly given the growth of the litigation funding sector over the past decade. Further details will be available …

Navigating the issues
Consumer Duty, forbearance and good outcomes in consumer credit

Published 08 May 2024

WHAT REGULATATIONS HAVE CHANGED FOR CONSUMER CREDIT FIRMS? Making smart financial decisions in an uncertain economic climate can be challenging for some borrowers and in its 2022 to 2025 strategy, the FCA recognised this challenge, stating: “Combined with greater vulnerability among consumers due to the pandemic, this (the rising cost of  living) may drive greater demand for a range of credit products.  Consumers will also increasingly  look for new ways to manage and make more of their money.” Consumer credit firms across the UK are facing new regulations and increased responsibility that mean they must do more to ensure that borrowers are offered the right products that offer fair value. Additionally, consumer credit firms must ensure that during the process of forbearance, when borrowers are unable to repay, that greater efforts are made to understand the borrower’s real financial situation and find a fair solution for both parties. These new Consumer Duty regulations, which apply to products and services across the sector, have established higher and clearer consumer protection standards across consumer credit and the wider financial services sector. They seek to ensure that borrowers receive ‘good outcomes’ and that firms provide evidence that these outcomes are being met. Essentially, it requires firms to put their borrowers’ needs first and be aware of any vulnerability and affordability issues at every stage of the borrowing journey. WHY IS THIS IMPORTANT TO CONSUMER CREDIT FIRMS? Protecting borrowers from losing life-changing amounts of money and making sure clients can afford their financial commitments must be a priority. Not least because the FCA is threatening “severe penalties” for firms that are non-compliant: ‘Firms which don’t meet our minimum standards put consumers at risk. They also undermine trust in financial services and markets. We will act faster, challenging  ourselves and testing the limits of our powers, to remove these firms from the market. Doing this will support us in reducing and preventing harm, creating a better functioning market.’ Consumer Duty has significant loan forbearance implications for consumer credit firms. This is considered particularly important to the regulators, with the Bank of England’s financial policy committee (FPC) reporting an increase in borrowers falling into arrears, and the number of borrowers falling behind on their debts expected to increase. To mitigate this, the FCA has emphasised the importance of lenders providing appropriate support – treating borrowers in financial trouble with extra care to ensure that those who are already vulnerable do not get a worse outcome. According to one FCA report: over half of borrowers have suffered a negative life event through no fault of their own and were facing financial difficulties as a result a significant proportion also had physical or mental health issues, which needed to be taken into consideration when seeking support on their financial difficulties 59% of borrowers in financial distress had missed one or more payments on credit products (including mortgages) in the last six months 40% of borrowers in financial difficulty had a negative or indifferent experience with their lender. SO, WHAT …

Technology – the pace of change is rapid

Published 07 May 2024

Developments in technology have been back in the news in recent weeks. Open Banking, the use of data and AI have all received mentions. Though they offer exciting possibilities, these new developments need to be balanced with the appropriate checks. We are all aware of the potential unintended consequences and the lag that can occur between innovation and necessary regulation. Taken with the importance of protecting the customer and their data, it is not surprising that we have seen the FCA sharing its views on these topics. Firstly, the regulator published its Feedback Statement on potential competition impacts from the data asymmetry between Big Tech firms and firms in financial services. In its overarching strategy, the FCA is committed to identifying potential competition benefits and harms from the Big Tech firms’ growing presence in financial services, hence its research in this area. One area of concern was that the asymmetry of data between Big Tech firms and financial services firms could have significant adverse implications for how competition develops in the future. However, so far, the regulator has found that no significant harms have arisen from data asymmetry, while they work on starting to develop a regulatory framework that enables increased competition and innovation. The FCA will continue monitoring Big Tech firms’ activities in financial services. Depending on the outcome of this monitoring, the FCA plans to develop proposals for consideration in the future. Firms should also be following developments. Elsewhere we saw an update on AI from the regulator. This followed the Government’s response to its White Paper: A Pro-Innovation Approach to AI Regulation which noted the rapid growth in the use of AI and the need to develop a pro-innovation regulatory framework. The FCA has said that it wants to promote the safe and responsible use of AI in UK financial markets and leverage AI in a way that drives beneficial innovation. Their focus is on how firms can safely and responsibly adopt the technology as well as understanding what impact AI innovations are having on consumers and markets. Interestingly, the FCA has also talked about the role AI may play in regulating the financial sector. For example, it could help identify fraud and bad actors. The FCA plans to invest in technologies to monitor regulated markets. Finally, there was a speech from Nikhil Rathi, FCA Chief Executive, which picked up a lot of these themes. He talked about the need to lead a co-ordinated and effective effort to make the most of the opportunities of Big Tech – whilst mitigating the risks. He said the FCA needs to remain vigilant about data asymmetry or risk putting off incumbents and innovators from retail financial services. Rathi mentioned that the FCA is examining the case for developing a commercially viable framework for data sharing in Open Banking and finance. Open Banking remains a central focus for future development in financial services. Through all these developments you can see that the FCA is keen to embrace new technology whilst making …

King V Black Horse Ltd
It’s possible to use a vehicle after rejecting it

Published 29 April 2024

INTRODUCTION There is often a difficult question where consumers under hire purchase or conditional sale agreements continue to use a vehicle after rejecting it. On 31 January 2024, the Court of Session allowed the consumer’s appeal in King v Black Horse Limited & Another [2024] CSIH 3 and decided it is possible for a consumer to continue to use the vehicle after rejecting it. THE FACTS The facts are pretty common. Alan King (the consumer) entered into a hire purchase agreement regulated by the Consumer Credit Act 1974 (the agreement) with Black Horse Limited (the lender) for a motor vehicle (the vehicle). The lender bought the vehicle from a dealer, Park’s Ayr Limited. The consumer had issues with the vehicle’s diesel particulate filter. The agreement was subject to the Consumer Rights Act 2015 (the CRA). The consumer purported to reject the vehicle claiming it was not of satisfactory quality when supplied (in breach of Section 9(1)). The consumer purported to exercise his final right to reject (rather than a short-term right to reject). THE EARLIER DECISIONS In the lower courts, the Court decided that the consumer could not continue to use the vehicle after he had rejected it. The Court said the principle in Ransan v Mitchell (1845) 7 D 813 continued to apply after the CRA’s introduction. The consumer appealed. THE APPEAL COURT’S DECISION The Court decided (whilst leaving the door open to ‘personal bar’ arguments) that: The proper approach to interpreting the CRA was to look at the words of the statute. The aim of the EU Consumer Rights Directive (the CRD) was “enhanced consumer protection”. It was possible to introduce greater levels of protection, and the UK decided to do so. The scheme of the CRA “differs in substantial ways from the protection previously offered to consumers”. For example, once the consumer rejects a vehicle then they are entitled to treat the contract as at an end even if the trader refuses to accept the rejection. But after rejecting a vehicle, the “consumer is under an obligation to make the goods available for collection”. The continued use “is not incompatible with that obligation”. The refund must be paid “without unreasonable delay and in any event within 14 days of the trader agreeing that the customer is entitled to a refund” and this “surely indicates that there must be anticipated a period of post-rejection use”. The fact that there is no mention of immediately stopping using the vehicle following rejection in Section 24(5) of the CRA indicates it is not a requirement. The trader may make a deduction for the use of the vehicle “in the period since they were delivered” under Section 24(8) of the CRA. This suggests the deduction is from the period of delivery to refund (not to rejection). If a vehicle’s use after rejection meant they lost their right to a refund, “there would be no need to qualify the trader’s right to reduce a refund” as the consumer would not be due any …

Do as you would be done by
Debt collection: Regulators address their concerns

Published 22 April 2024

From time to time, I like to pick up on key regulatory matters that affect CCTA members and our sectors. I think we can all agree that there has been a lot going on in Q1 2024, from a regulatory perspective. First, the Financial Conduct Authority (FCA) announced a review into motor finance commissions and applying temporary measures for complaint handling timeframes in the sector. This was then followed by a warning to firms on anti-money laundering concerns, a review of firms’ treatment of vulnerable customers, another ‘Dear CEO’ letter and, finally, a joint warning from regulators around concerns about debt collection practices. It is the last of these points that I would like to cover. I am sure many of you will be aware that the FCA, along with other industry regulators (Ofgem, Ofcom, Ofwat) recently issued a joint letter addressing concerns, in their respective industries, about firms’ debt collection practices. Jointly, these regulators have said that consumer harms in debt collection practices result from consumers being inundated with communications when they are in financial difficulty, those communications having intimidating or threatening tones and their debt advisors/organisations having unnecessary barriers when engaging with creditors on behalf of the customer. Contributing on behalf of the FCA, Sheldon Mills highlighted the concerns within the financial services sector. This part of the letter states that the FCA has concerns in several areas, which include, inadequate consideration for customers with characteristics of vulnerability, the perceived intimidating and unsupportive nature of communications, inappropriately testing around communications and the CONC requirements around contacting consumers at unreasonable times and intervals. The letter fails to clarify the communications that their concerns relate to. As you will all know, there are statutory communications that creditors must issue in accordance with legal and regulatory requirements. These are documents such as Default Notices and Notice of Sums in Arrears (NOSIAs). The legal requirements in respect of such statutory communications are prescribed in legislation, therefore, creditors cannot amend the frequency and tone of these communications. Timescales for issuing them and the wording contained within these are mandated. What these regulators are therefore referring to is the communication with consumers beyond these required communications, such as additional letters, telephone calls, emails, texts/SMS, and visits (if applicable). The quicker and easier you make it for consumers and their representatives to address debt and vulnerability matters, the less time and effort you will put into managing and maintaining those accounts going forward. The letter also includes communications sent out by any outsourced debt collection services providers that a firm may use. Remember, firms have a duty to ensure that their suppliers are also meeting regulator expectations. Consequently, it is a good reminder to go back and revisit some of these aspects. Considering this letter, firms should now be asking themselves a few specific questions. I know many firms will have reviewed their communications under the Consumer Duty implementation phase, but have you reviewed the frequency of your communications? The tone? And have you tested …

FCA publishes Financial Lives Survey 2024

Published 15 April 2024

Last week the FCA published the findings of its Financial Lives Survey on the cost of living, conducted this January. The FCA uses the survey to explore the finances of UK consumers and how they would assess their own situation. The survey was carried out between December 2023 and January 2024, with under 3,500 respondents. The regulator reported that 7.4m people were struggling to pay bills and credit repayments in January 2024, however this is down from 10.9m in January 2023. This is a positive step in the right direction, but this is still higher than the 5.8m recorded in February 2020, before the cost-of-living squeeze and the Covid pandemic began. Though it appears that the cost-of-living crisis has not been as bad as some expected, over 5m people still said they had fallen behind or missed paying one or more domestic bills or credit commitments in the previous 6 months from January 2024. To counter act this most people (77% or 40.5m) spent less or worked more to make ends meet. Despite high interest rates, 50% of renters (over twice the proportion (24%) of mortgage holders) reported they were not coping financially. Renting continues to be of high cost and a struggle to many. A key objective of the CCTA is to protect access to credit. The survey didn’t really explore the credit options people had available to them but it was interesting to read about the reasons people cut back on essentials. One percent of people reported prioritising paying back a loan from an unlicensed money lender or another informal lender. A figure we know is often under reported. Also, another four per cent reported they were prioritising paying back family or friends. We also know that the line between this form of borrowing can be blurred with illegal lending. The Illegal Money Lending Team has reported in recent times that around 60% of clients believed the loan shark to be a friend at the point of borrowing. In the 12 months to January 2024, 2.7m adults also sought help from a lender, a debt adviser or other financial support charity because they found themselves in financial difficulty. Nearly half (47%) of those that sought help said they were in a better position as a result. The FCA has used the survey as an opportunity to remind firms of their commitments to their consumers. The regulator has announced that its tailored support guidance, introduced in the Covid-19 pandemic, is to be transferred over to the FCA handbook. The new rules include: expanding protections beyond customers who have already missed payments, to those at risk of payment difficulty widening the forbearance options firms should consider enhancing expectations around customer engagement and providing information including on money guidance and debt advice requiring credit firms to consider customers’ individual circumstances when providing forbearance As we have said previously, dealing with customers in financial difficulty or those with vulnerable characteristics remains a central aim of the FCA. Firms should always be referring …