Regulation in a Consumer Duty World

Speaking at Intrum’s second annual outsourcing conference, trade body head Leslie emphasised how critical collections and credit management are in a functioning society, but added that consumer legislation is often not written with the industry in mind.

He shared the results of a CSA poll about the awareness and experience consumers have of debt collection agencies, with 81% aware of the industry and 17% saying they’d been contacted by a collections agency – up from 13% in 2022. Among those consumers contacted, only a quarter said they had a negative experience.

Consumer Duty comes calling

Addressing the arrival of Consumer Duty, Leslie said “We all want good outcomes for consumers and should embrace the concept of the Consumer Duty. We have argued that the term ‘good outcomes’ might be tricky when it comes to collections, litigation and enforcement, but the Financial Conduct Authority (FCA) have said they are looking at it in the wider sense.”

He added that the collections industry already has high standards in this regard:

Most intelligence will come from the Financial Ombudsman Service. While it’s early days, fortunately for our sector the uphold rate of complaints is very low – around 25%. It can be 45-50% for other parts of the sector.

Leslie also highlighted that the FCA is consulting on new data monitoring to granular account levels and focusing on non-financial conduct (such as diversity and inclusion), while policies on vulnerability are developing differently across different sectors.

General election on the horizon

Despite the looming 2024 General Election, Leslie said he believes the FCA will remain focused on the implementation of Consumer Duty and politicians are likely to be less hostile to financial services, given the economic challenges.

He told delegates that “a lot of financial services partners are still subject to very prescriptive bits of legislation that are not being reformed at speed, which can be very confusing for consumers and is a drag anchor on much of the engagement we need to encourage”. However, he said there is little political capital to be gained for politicians by taking this on.

Leslie emphasised that media and political issues can bubble up quickly on the back of single stories or social media anecdotes and that unregulated buy-now/pay-later payment offers could be the subject of scrutiny.

There’s a lot of attention there, but BNPL is pretty much free. If credit is necessary you don’t want people to have high interest rate charges as well.