Focus On Financial Crime

Earlier this month the FCA issued a Dear CEO letter arising from a number of recent assessments of how well Annex 1 firms are complying with Financial Crime regulations. “Annex 1” refers to a group of businesses who engage in activities that require them to be supervised by the FCA specifically in relation to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations of 2017 (often referred to as MLRs) – even though they are may not otherwise be regulated by the FCA.

The letter raised concerns that they were seeing similar, repeated failures when they were looking at these firms, with recurrent problems including “discrepancies between firms’ registered and actual activities, financial crime controls which had not kept pace with business growth, a failure to risk assess their own or their customers’ activities properly and inadequate resourcing and oversight of financial crime issues and requirements”. The letter goes on to set out the regulators expectations of what happens next: recipients will need to complete a gap analysis against each of the key problems highlighted within the next six months, and then quickly work to close any identified gaps and share the analysis across the firm.

If your firm is affected, Kind Consultancy can help. We are Governance, Risk and Compliance specialists with a track record of successfully helping Financial Services businesses with their Financial Crime needs. Let’s dig in on some of the specific issues the regulator is looking at and set out how Kind can assist.

  1. “Lack of Financial Crime controls to keep pace with business growth”.

The Dear CEO letter cites multiple cases where “Financial Crime policies, controls and procedures have not kept pace with the size and complexity of the business”. This also speaks to a lack of engagement from senior management on Financial Crime issues – these factors aren’t being thought about at every stage of expansion.

  • Kind have worked with a number of businesses engaging in rapid expansion, including newly funded start-ups through to established international businesses moving into new territories, and we are well versed in running robust search and selection campaigns in tight timeframes for Financial Crime projects where we have sourced top talent across all levels of seniority – and have deployed interim teams at short where an Interim Manager or contract team are needed immediately while a permanent person is found.

2. “Business Wide Risk Assessments (BWRA)”

The FCA notes that in some firms they looked at the BWRA was “completely absent” and in others, a BWRA was completed but “the quality [was] poor”, lacking detail and clarity. In some cases, there was a failure to identify Money Laundering, Terrorist Financing and Proliferation Financing failures. Firms should be revising and updating their BWRAs to ensure compliance with MLROs and to reduce the risk of Financial Crime.

  • Kind can supply organisations with an independent “Critical Friend” to complete an in-depth business wide risk assessment, giving you a clear view of all the risks your firm is exposed to and, if desired, helping to or taking the lead on designing the controls and changes needed to mitigate the identified exposures.

3. “Due Diligence, Ongoing Monitoring and Policies & Procedures”

The firms assessed were found by the regulator to have Customer/Client Due Diligence and Ongoing Monitoring policies and procedures that were vague and lacking in detail, creating ambiguity around the actions that staff should be taking. In some cases, there was insufficient guidance on when customers should be subject to the regular Customer Due Diligence (CDD) process or the Enhanced Due Diligence (EDD) process.

  • Kind has a very strong track record of supplying top-tier Governance talent to Financial Services firms of all kinds and sizes to rewrite and upgrade these policies – and to then help embed them in the business, ensuring genuine understanding and buy-in from all staff.
  • Kind has previously deployed large-scale teams of KYC and EDD analysts to carry out due diligence on New to Bank Clients and Existing Clients that have become high risk as part of a Refresh project for a major international bank.

4. “Governance, MI and Training”

The FCA findings cite multiple firms having under-resourced Financial Crime divisions and a lack of proper training on Financial Crime issues for staff. Some organisations were not providing role specific training, some were missing key topics and some staff were found to have generally very low levels of Financial Crime awareness.

  • Kind Consultancy works with multiple Financial Crime experts who have run tailored, large-scale training programmes for Challenger Banks, Consumer Credit firms and other Financial Services businesses who had identified a lack of Financial Crime awareness. Our experts will operate on-site with your staff, delivering a detailed Financial Crime training programme covering everything employees need to know in order to excel at all aspects of their job with Financial Crime exposure. We’ll be happy to customise all aspects of training to fit your specific organisation’s products, business model and size.
  • In terms of under-resourced teams, Kind is perfectly positioned to help with this. Financial Crime recruitment has been a core activity for us since our inception, and we have an extensive database of some of the best Financial Crime talent in the industry, at all levels of seniority. Whatever aspect of your Financial Crime team needs to raise headcount, Kind will be able to quickly find the best possible candidates to fill the gap. Through our vast network and skill set we can apply a mixed methodology to go out and identify the very best talent for your role that is inaccessible through traditional recruitment, making a confidential approach to head hunt the best possible people.

5. “Absence of a clear audit trail for Financial Crime related decision-making”

Finally, the last identified weaknesses were around audit. Some of this concerned changes that existing Senior Management need to make, but it also highlighted that some large firms had failed to “establish an independent audit function” and they expected such a function to “examine and evaluate the adequacy and effectiveness of the [Financial Crime] policies, controls and procedures adopted”.

  • This is an area Kind can assist with – we have helped multiple clients both by creating permanent Internal Audit teams and by supplying trusted contract expertise to run Audit projects, giving organisations a detailed breakdown of how all aspects of their Financial Crime work is operating.

Financial Crime Case Studies

AML & CTF Training

Recently we were approached by a challenger bank to provide training for their Operations and Senior Management team on Anti Money Laundering and Counter-Terrorism Financing. We connected them to one of the most trusted Financial Crime SMEs on our Agile bench, and together we put together an intensive training programme. The training covered a wide array of Financial Crime topics, building up the client’s understanding and then explaining their specific responsibilities relating to each issue. The client was very pleased with the training, and has retained us to regularly provide training to their organisation, with the content continually enhanced to incorporate new regulations and developments.

Financial Crime SMEs

We have also worked with a Retail Bank who we supplied with a team of Financial Crime SMEs (Subject Matter Experts) to carry out Enhanced Due Diligence on new clients who had been red flagged by the front line team. Our team then assessed the legitimacy of the customer, either giving the go-ahead to onboard the client, escalating internally or in the most extreme cases, raise with external agencies and offboard the client.

S166 – KYCs

We were contacted by a large global retail bank who had been issued a Section 166 notice in their UK operation. We deployed 35 KYC analysts to carry out Enhanced Due Diligence on existing customers to identify gaps within the KYC process. This was then fed back to the organisation, and Financial Crime SMEs were brought in to improve existing controls and frameworks and rewrite policies. Kind then introduced Trainers to the business to upskill permanent members of staff and ensure that BAU operations were of a high quality.

International KYC & AML Project

As a final example of recent Financial Crime work, we worked with clients further afield looking to tap similar UK Compliance expertise. One of our clients, a multinational bank, had suffered a serious Financial Crime failure in one of their European divisions and wanted to bring in trusted KYC and AML resource from the UK for a large scale project identifying and addressing the gaps. With pre-screened, pre-qualified contractors who were part of our Kind Agile Solutions bench, we were able to quickly put forward a large team of seasoned KYC and AML experts and have them at work fast. Many of that team would go on to be permanently retained by the business as they were so pleased with the work, and the client has not faced any subsequent public Compliance issues.

Talk to Kind

Even if your firm is not part of the Annex 1 group, this is a good reminder that the FCA is very focussed on Financial Crime right now, and “inadequate resourcing and oversight of financial crime issues and requirements” is something all Financial Services businesses should be wary of, taking preventative measures as part of a pro-active approach. From 2021 to 2022 the total value of fines issued by the FCA came to over £600,000,000 and over two thirds of those were related to Financial Crime and AML. This is an ongoing focus area for the regulator across all of Financial Services, and no organisation can afford not to take it seriously – for example, the Dear CEO letter of May 2021 similarly highlighted Financial Crime and AML framework failings in retail banks, asking them to undertake comparable gap analysis exercises and mitigate identified weaknesses. The message is clear that regardless of what part of the Financial Services landscape you’re operating in, this needs to be a top regulatory priority.

For a confidential conversation about how Kind Consultancy can help, get in touch on 0121 643 2100 or via

Discretionary Commission Arrangements: Key Preparations

What’s Happening With DCA’s in 2024?

Motor Finance compliance developments rarely make the mainstream press. When they do – you know something big is going on. What’s happening with the FCA and Discretionary Commission Arrangements in 2024? Are we about to see the biggest complaints landscape upheaval since PPI? Here’s everything you need to know.

January 11th, 2024 – The FCA Statement

On the second Thursday of the year, the FCA released a statement titled “FCA to undertake work in the motor finance market”. The statement begins by summarising the 2021 ban on discretionary commission arrangements, removing an incentive for brokers to raise the interest rate a customer would pay on their car finance. The regulator noted that subsequently there had been a large quantity of complaints from customers who believed they had received commission-motivated higher interest rates before the ban.

The majority of these complaints have been rejected by motor finance firms who do not believe they have acted unfairly – but the Financial Ombudsman Service has reviewed some of these complaints and found in favour of the customer. They expect this to lead to a rise in the volume of these complaints.

In reaction to all of this, the FCA announced in their statement that they would be conducting a review of “historical motor finance commission arrangements and sales across several firms.”

What’s Happening Now?

The FCA review will look to establish if there has been “widespread” misconduct causing detriment to consumers. If that’s the case, the next move will be to decide how these complainants can receive “appropriate settlement[s] in an orderly, consistent and efficient way”. One immediate effect of this is that the regular 8-week deadline for resolving motor finance complaints has been paused for 37 weeks – specifically in cases where “there was a discretionary commission arrangement between the lender and the broker”.

The pause is backdated to apply to complaints received on or after November 17th of 2023, and will apply to complaints received up to and including the 25th of September 2024. On the customer side, the 6-month period to refer complaints to the Financial Ombudsman Service is being temporarily extended to 15 months.

What Happens Next?

The FCA statement includes the intention to announce next steps in the third quarter of 2024.

At present we can only speculate about what those next steps will be. How the regulator response plays out will depend entirely on what the review finds – how widespread discretionary commission arrangements were and how severely they were impacting consumers. It’s possible that this will then become a PPI style high-profile mini-industry within the complaints world, requiring significant investment from motor finance organisations both in terms of compensation and complaints resource. Given press coverage, regardless of their decision, it is near certain that we will see an increase in complaints as more consumers become aware of the situation and the possibility they will have been affected.

Another factor to consider when predicting how this will play out is the Financial Ombudsman Service’s plans for the year. Their annual plan consultation opened in December includes the possibility of them beginning to charge “professional representatives” – introducing a cost to CMCs bringing claims against Financial Services firms. That consultation closes on January 30th with the Ombudsman’s finalised plan and budget for the year set to be published on March 31st. Depending on what they decide and how large the fees are, that could seriously disincentivise large scale CMC activity on this issue regardless of the FCA decision.

What Should Motor Finance Businesses Do?

Motor Finance firms should be considering all of your current capabilities that could be effected – we could be dealing with complaints dating back as far as April 2007, think about how far back you might need to go and what data you can utilise. What do your current processes relating to DCA’s look like? What do you have in place for customers in scope? How will you defend CMC activity? What forecasts do you have in place in terms of budgeting for redress?

Earlier this week we put together some Frequently Asked Questions and Answers on the issue of Discretionary Commission Agreements, click here to read those in full.

The FCA’s “Temporary changes to handling rules for motor finance complaints” webinar today made it clear that the regulator expect firms to continue resolving all the complaints that they can and that the current extended timelines shouldn’t be treated as a total freeze – once the pause ends, complaints will be picked up at the point they were frozen so, for example, a complaint that had been with the firm for 3 weeks when the pause came into effect will need to be resolved within 3 weeks after September 25th. Right now, we would recommend motor finance firms continue responding to complaints wherever possible and start to plan ahead, carefully considering their complaints capacity.

There are some key factors to think about in terms of Complaints planning specifically. In situations where an organisation does not still hold all of the documentation relating to a complaint and the firm will be expected to conduct a full investigation and gather whatever documentation they can, examining what documentation they can retrieve from the customer and from the lender or any other parties involved.

There are also no plans at present to release any fixed templates how complaint responses. All of which paints a picture of a very involved, investigative complaints process, requiring trained, experienced and knowledgeable complaints professionals – and, depending on the FCA decisions we see later in the year, possibly a large number of them.

Kind Consultancy is currently supporting a number of Motor Finance firms in relation to DCAs, from ringfenced project teams to flexible complaints resource. For a confidential discussion about how we may able to assist your organisation, get in touch on 01216432100 or via – or you can find out more about our Kind Agile Solutions contract resource offering here

Kind Consultancy nominated for “Lichfield Small Business of the Year”

We’re very proud to announce that we have been shortlisted for the “Lichfield Small Business of the Year” award at the 2024 Royal Sutton Coldfield, Lichfield & Tamworth and Cannock Chase Chamber of Commerce Awards.

We’ve had a fantastic year and it’s great to be recognised like this – we’ll see you all at the awards show in January.

Leaving the Comfort Zone

When it comes to getting out of your comfort zone, it doesn’t get much more literal than throwing yourself out of a small aeroplane flying at 14,000 feet. Last weekend, that’s exactly what I did. Presented with the opportunity to skydive for a good cause, I decided this might be my best chance to try something I’ve always wanted to do – and which I had previously been terrified of. That fear didn’t disappear as our plane rose above the clouds and I prepared to jump – quite the opposite. But it was a good, visceral reminder that things that push us out of normal patterns and areas of operation are really valuable. The jump was an incredible experience – a few seconds of freefall that felt like minutes, holding my breath for the parachute pull, the slow descent and landing – and one I’m really glad I decided to do. Once the adrenaline wore off, I felt newly confident, and that stayed with me long after the fact. As I carried that feeling into work, that got me thinking about the comfort zone.

Working in the Comfort Zone

When we talk about the ‘comfort zone’ at work, it can sound like not such a bad thing – we all like to be comfortable! If you’re in a job where you have a firmly established routine, you’re always doing the same kind of work with the same kind of approach and working with the same people, it’s not necessarily bad, but it can be easy to slip into a sort of “autopilot” mode. Someone who is never being challenged and never tackling new problems isn’t getting any opportunities to expand their skill set and learn new ways of working. So how can you get out of your comfort zone?

1. Target existing challenges…

It’s vital to a long, successful career to always be learning new things, to remain curious and open to new possibilities. Think about what aspects of your job or your industry feel scary or unknown to you – these are probably something you don’t have to deal with often but dread whenever they come up. Stop running away from those, and start running towards them.

Work out what about it scares you – maybe you feel like you’re not good at a specific irregularly recurring task you have to take care of, like putting together your end-of-quarter presentation or running annual progress meetings with your direct reports. Find out if you can get training on that specific task, research online how other people approach it and the next time it comes up try not to dread it but to approach it as something exciting – an opportunity to see if you’ve gotten better, an experience you can learn from if it proves to still be difficult. Whatever happens, approaching with an open, positive attitude will make it easier to handle, building your confidence.

2. … then seek new ones

If you’re on top of every aspect of your current role and you’ve grown confident even in handling the aspects that used to scare you, then it’s time to find some new tasks. Ask your manager or team leader if there are any projects you can contribute to or any other responsibilities you can take on. Talk to teams in other departments and see if there are any opportunities to collaborate, or if they have a use for input from someone with your specific knowledge. Maybe something will come up that isn’t at all the kind of task you were thinking about – and that’s ok. This is all about learning and trying new things and the only way to become good at something new is to first be bad at it, a key thing to remember when taking steps to get out of your comfort zone.

3. Change the way you work every day

This one is simple but can have surprising results if you want to start small. Try re-arranging the structure of your work day. If your normal rhythm is doing sales tasks in the morning and admin in the afternoon, switch them around. If you’re spending set days of the week on specific parts of your job, try moving them around the week. If you’ve been locked into a fixed schedule for a long time, you may be shocked at how different this feels, and find you’re more actively engaged in each of your activities. It may turn out that your newly changed schedule doesn’t work for you, and that’s ok too – actively thinking about when and how you do what you do is a good way to stay alert to stagnation.

4. Still feeling stuck? Time for a whole new zone, at a new job

If you try every possible way of expanding how you work, growing your knowledge and skill set and chasing down every challenge available within your current role – then that’s a pretty solid sign that it’s time to find a new one. Whether that means going for a promotion or looking to a new employer, perhaps even in a different location, the ultimate leap out of your comfort zone will take you into a totally new zone. A new job will give you many learning opportunities as you take on new responsibilities, working with new people in new ways. Those big leaps to push your career progression forward are central to continually expanding your comfort zone and seeing how much you can learn and grow.

Feel the fear – do it anyway

The scariest moment of my skydive was the moment just before leaving the plane – and the best part was the free fall right after. Taking the jump into the unknown at work can be a scary prospect – but the rewards are great, and longer lasting than my journey back to the ground. Embrace change, challenge yourself, and take your professional life to new heights.

Consumer Duty: The Next Steps

We’re now three months on from the new Consumer Duty coming into effect in relation to new and existing products and I think this is a good moment to take stock.

At the beginning of this month, the FCA’s Director of Cross Cutting Policy and Strategy gave a speech on Consumer Duty, in which she highlighted that the benefits for consumers can already be seen, with firms introducing a variety of accessible communication formats, simplifying the language used in letters, adding more upfront information about products to their websites and reviewing fees with a focus on fair value, as just a handful of examples.  I’m sure you have similar changes happening at your organisation and will be seeing improved customer outcomes as a result.

This has been one of the biggest regulatory changes of the last decade, and a huge amount of work has happened across the industry over the last 18 months and more to reach this point. Which is why I think it is timely to focus on what’s still to do.

Consumer Duty is not something a firm can say they have “done” and move on from – this is an ongoing new paradigm for how the Financial Services sector in the UK exists and operates. Many firms have absolutely understood and embraced this, focussing their culture and systems on positive customer outcomes, continuing to embed Consumer Duty throughout every aspect of their work.  The big question right now is – how can you evidence that? How would you prove to the FCA that you’re continually enacting the values of the new Consumer Duty?

Positive customer outcomes need to be measurable. The work you’ve already done to align with the new rules needs to be assessed, tested, understood and evidenced. Gathering data and MI will continue to be crucial, as will monitoring activity – but these need to be seen as part of a bigger process, rather than an end in themselves. How can you use the MI to continue improving your products? Are you gathering the right data? Is the monitoring work looking at the right areas?

An attitude of continuous improvement will, I think, be what the regulatory wants to see going forward. A cycle of assessment and meta-assessment, always with the goal of delivering the best outcomes for customers. Outcoming Testing will be particularly important as the FCA looks for tangible evidence that your firm’s Consumer Duty work is functioning as it should.

Over the last 18 months, we’ve been supporting a number of firms with a wide range of Consumer Duty needs, including preliminary assessments, training and ongoing advice and assistance. We are working with consultants who can guide your business through these next steps who have strong experience of driving continuous improvement, designing regulatory solutions, helping to embed Consumer Duty throughout complex businesses and supporting the development of meaningful management information across all products and services.

If you want to have a confidential conversation on how we can help to set your firm on the right path with your next steps, please drop me an email or call on 0121 643 2100.

[Originally published on Kind Consultancy’s LinkedIn, November 6th 2023]

KYC in a Digital Age

KYC – Know Your Customer. One of the acronyms we encounter most often working in the Governance, Risk, Compliance & Financial Crime space, and the first line of defence a new customer reaches when they join a new Bank, Building Society or other Financial Services business. In an increasingly digital world, the work of KYC is adapting and changing quickly. With new, innovative FinTech products and platforms appearing every month, the process of screening and onboarding customers, ensuring they are who they say they are and reducing the risk for the company, needs to happen remotely, quickly and at a larger scale than ever before.

There’s never a time when KYC is not important – any business that holds and transfers money can potentially be misused. Reviewing and confirming who a customer is and what they have done in the past is the foundation of a robust anti-Financial Crime plan, reducing the risk of fraud, corruption, money laundering and terrorist financing. But right now, KYC is perhaps more important than ever, in no small part because of the continual shift toward digital-first and digital-only banks and services.

Financial Services has always been a sector at the forefront of technological advances, and the FinTech explosion of the last 5 years is a testament to that – but new tech creates new challenges – and requires new solutions. A digital-only bank that needs to verify who a new customer is entirely through an app face very different challenges to a building society onboarding a new customer face to face. These new platforms need innovative solutions, and many digital identity verification providers have sprung up to meet that challenge. Technology is also a weapon of financial criminals, however, and new developments create new tools for them to commit fraud, which have to in turn be met by new deterrents and defences from the Financial Services world.

So technology is crucial, but a state-of-the-art KYC function cannot rely on that alone – having skilled, knowledgeable staff is still absolutely key. This is a big part of the demand for good KYC professionals rising this year – the job market. As we know, across Financial Services and across all sectors, we’re in a very much candidate-led market, with businesses needing to compete fiercely to get the very best people, who right now will have their pick of multiple opportunities – if they’re willing to move.

And hiring those KYC superstars needs to be part of a business-wide approach to compliance – the final piece of the puzzle. With the ongoing regulatory drive towards senior leadership having personal responsibility for creating positive compliance cultures, KYC needs to be carefully thought about and integrated. We’ve seen regulations in the UK and elsewhere get more and more intensive, with firms being expected to go beyond box-ticking, to consistently meet high standards of KYC screening. Failure to do so can not only enable fraud, but can subsequently lead to large fines from regulators and the associated reputational damage in the eyes of the public.

For some businesses, KYC has perhaps been an undervalued exercise focused on simply gathering the necessary identification and checking against watch lists and sanctions registers – and that’s simply not going to cut it anymore. For some businesses this will need a ground-up rethink of the approach to compliance in the business – how can they become proactive and not just reactive? For others, this will be the next step in an ongoing process to stay on top of regulatory requirements and deliver a top-tier Compliance and Anti-Financial Crime service that gives both the company and its customers’ peace of mind.

Whatever stage you’re at right now, Kind Consultancy can help. We focus exclusively on Governance, Risk, Compliance & Financial Crime roles within Financial Services, and connecting businesses to excellent KYC talent has been a core part of what we do ever since our inception. If you’re looking for game-changing KYC professionals – whether you need a full team of contract KYC Analysts to complete a project by a tight deadline, or you’re looking for a permanent Head of KYC to guide your department for years to come, get in touch on 0121 643 2100 or e-mail for a confidential conversation.

Affordability: A Big Cog in the “Problem Debt Support”​ Machine – Guest Post

June’s Dear CEO letter “The rising cost of living – acting now to support consumers’ highlighted the FCA concerns about affordability and their expectations of problem debt support provision

This article:

  • Considers the central themes of the letter, the FCA’s expectations and the implications for arrears management and problem debt support
  • Reflects on the emerging affordability threat, and the capacity v capability challenge
  • Explains why Affordability is not just about numbers
  • Shares a three-step approach to affordability designed to meet FCA expectations, demonstrate duty of care, support fair value, and optimise the potential for good customer outcomes
  • Offers ten top tips for meeting the FCA’s expectations and managing the evolving affordability challenge

Unsurprisingly consumer protection and support for the financially vulnerable is right at the forefront of the FCA’s focus.

Three recent “Dear CEO” letters have focused on the affordability threat faced by increasing numbers of consumers and emphasised the FCA’s expectations of Lender support.

With activity across arrears book looking inevitable to rise the letter is a timely reminder of “what good looks like” from the regulator’s perspective, and of the need to ensure this is reflected in policy, practice, and outcomes.

Core messages include:

  • a prediction of rising numbers of customers experiencing affordability issues
  • an expectation of proactive action to support customers at risk of, or already experiencing, affordability issues
  • the importance of a comprehensive toolkit of support options
  • the need for flexibility to tailor support options to meet the circumstance-driven needs of customers
  • the need for active management of problem debt support plans, ensuring they remain aligned to the customer’s circumstances, and on track to deliver a good customer outcome – supported by the flexibility to modify plans where necessary to protect outcomes
  • recognition of the additional challenges linked to supporting a large population of customers facing an affordability threat and financial difficulty for the first time

Understanding the Affordability Threat … Ripples and Waves … Capability and Capacity

For the majority of lenders it’s a long time since arrears policy and practice have been closely scrutinised, or indeed put to the test. However, the growing Affordability Threat means that looks set to change

  • Recent ONS figures indicate inflation is at 9.4%. The IFS have highlighted that this understates the inflationary impact experienced by lower-income families are disproportionately affected by increases in energy costs, and basic food prices. For these families, the true cost of inflation is significantly higher
  • Lloyds Bank have reported a 30% increase in demand for debt services in the first half of this year
  • StepChange have reported a 12% month-on-month increase in new clients seeking debt advice – up to 14,000 in May – with the cost of living becoming the second most commonly cited reason. They estimate that 27% of the population are considered to have low financial resilience
  • National Energy Action has warned that they expect one in three in the UK, are expected to be in fuel poverty following October’s price cap increase
  • Foodbanks are increasingly reporting that they are unable to meet escalating demands

Whilst felt by all, the immediacy and severity of impacts are not homogenous. Households will vary in their financial resilience and financial reserves – and therefore in the tipping point into financial hardship.


  • some lenders are yet to experience a significant upward trend in arrears, or requests for problem debt support
  • neither the industry as a whole nor the majority of mainstream lenders are likely to face the huge wave of need for support akin to that linked to Covid Payment Holidays.

What’s more likely is a ripple effect, as differing levels of financial resilience and financial reserves are eroded and exhausted.

Whilst much of the media focus is on the impact on lower-income households, from a lender’s perspective it would be unwise to assume that higher-income borrowers, with good credit histories and responsible borrowing behaviours (indicated by high Delphi Scores), are exempt from risk.

Indebtedness Indexes will prove increasingly useful in identifying those at greater risk from inflation and interest rate rises – regardless of income level, previous borrowing behaviours, and payment history.

A high-income borrower with a high indebtedness score may be at greater risk of problem debt than a low-income borrower with a low indebtedness score.

How and when individual lenders experience a significant upturn will be determined by the borrower profiles of their books, but few will ultimately remain unaffected.

Whilst it may take time for the ripples to build into waves, and some may find a degree of comfort in their success in managing Covid Payment Holiday volumes, for the industry as a whole, and most lenders, the real challenge has shifted from capacity to capability.

The disruption to the relative financial stability of recent years means that established ways of thinking, analysing and operating may no longer be fit for purpose.

The FCA’s endorsement of customer-led support, significantly reducing (although not entirely erasing) lenders’ duty of care (and the skill needed to provide support) ended when the Covid Payment Holiday window closed.

The ability to manage complex affordability issues to the standards expected by the FCA, and necessary to deliver good commercial and customer outcomes has not been tested, or closely scrutinised for an extended period of time.

Historically thematic reviews and enforcement actions have demonstrated the FCA’s capability concerns. Added to widespread recognition of skill erosion over time, lenders should be prepared for detailed scrutiny ahead.

Similarly, new ways of thinking about risk, and an agile approach in responding to evolving economic factors will be needed in order to meet the FCA’s clearly expressed expectations of a proactive approach.

Customer behaviour adds another layer of challenge. The FCA’s letter reminds that many customers will be facing significant financial difficulty for the first time. Experience shapes behaviour, understanding and expectations, and many needing support will be unprepared for the debt support process.

Supporting customers to understand and make informed decisions at all points of their problem debt journey will be key to demonstrating a duty of care, and to achieving positive outcomes.

Affordability – A big cog in the “problem debt support machine”

Systems Theory reminds us that “the whole is greater than the sum of its parts”. Like cogs in a machine, each part has the potential to impact positively or negatively on others, and on the overall outcome.

An underperforming cog leads to an underperforming machine at best, total breakdown at worst. However individual cogs do not all make the same contribution, some are more powerful and impactful than others.

Affordability is the big cog in the “problem debt support machine”, It’s not just the problem that switches on the machine into life, it’s also integral to decision making, providing fair value support plans and achieving good outcomes.

Busting the Affordability Myth – affordability is not just a number – an Affordable Plan is not always a “good plan”

Offering problem debt support that could have been reasonably foreseen as unaffordable is an obvious failure of duty of care.

Equally, demonstrating the support offered to be affordable would not on its own be sufficient to demonstrate the regulator’s expectations have been met.

An affordable debt support plan is not always a good plan. A good plan must deliver fair value, not result in avoidable detriment, and have a reasonable expectation of achieving a good outcome for the customer.

To achieve these standards the qualitative aspects of affordability must be understood and embedded.

Effectively integrating affordability into problem debt support requires three steps.

Affordability Snapshots, Profiles, and Journeys

  1. The Affordability Snapshot – this is a point in time measure that determines if a customer is in or at risk of financial difficulty. Driven from income and expenditure information it’s the trigger for the debt support process. However, basing debt support decisions and plans exclusively on an Affordability Snapshot creates a high risk of detriment. It will at best result in temporary sticking plaster, and may exacerbate the customer’s difficulties, and at worst result in a missed opportunity to bring the borrowing back on track.
  2. The Affordability Profile – creating an Affordability Profile is the foundation for providing tailored debt support that is outcome orientated and offers fair value. It incorporates qualitative information – what is known, or reasonably expected, about changes to the customer’s circumstances – to determine how the affordability of the customer’s debt is expected to evolve over time.
  3. The Affordability Journey – a problem debt support plan based on a well-produced Affordability profile, and utilising tailored tools from a comprehensive toolkit, is a good start, but a duty of care continues to apply for the duration of the support plan. As the saying goes “life is what happens as we’re busy making other plans.”

In some cases, the events will not happen as expected or assumed in creating the initial Affordability Profile.

Effective problem debt support monitors each customer’s progression through their debt support journey, re-assessing alignment to the customer’s circumstances and needs, and re-evaluating the plans being on track to deliver outcomes

A poorly aligned support plan doesn’t deliver fair value, reduces the likelihood of a positive outcome, and increases the risk of detriment.

Ten Top Tips for Meeting The Affordability Challenge

  1. Consider “what good looks like” through a lens that balances regulatory requirements and expectations, with customer needs and outcomes, and business drivers.
  2. Be mindful of the potential and risks of Group Think when assessing your “as is”
  3. Keep up to date with signposting from the FCA The June 16 Dear CEO Letter is the most up-to-date insight into what the FCA expect and where scrutiny will be directed – how does your problem debt support provision match up?
  4. The finalised Consumer Duty Guidance is another useful signpost. It applies throughout the product journey and for increasing numbers of customers problem debt will be part of that journey. Consider how Outcomes & Cross-cutting Rules apply.
  5. Recognise the pivotal role of Affordability in meeting your duty of care, satisfying the existing Rules and Principles, and meeting the expectations of Consumer Duty
  6. Ensure the three-step affordability model is embedded throughout your problem debt support framework. Policy, processes, problem debt support strategies, systems, customer communications, staff development
  7. Focus on the capability challenge. Be wary of the untested comfort of a “groupthink” assumption that everything is ok. Recognise the skill erosion of recent years. Invest in upskilling to become match-fit for the challenges ahead. Remember this is a longstanding area of regulatory concern.
  8. Don’t overlook behavioural issues and biases that will impact your teams and your customers, and the implications for problem debt support
  9. Consider how to meet the FCA’s expectations of a proactive approach. Not just for customers already in difficulty but for your overall lending book. Horizon scan for affordability at-risk hotspots and initiate pro-active outreach
  10. Build an outcome-orientated quality framework that triggers action and resolution where issues are identified

Be prepared to provide evidence of how your debt support provision enables and delivers tailored, fair value and outcome-orientated problem debt support. Expect scrutiny not only of customer outcomes but also exploration of how the overall debt support framework and agent capability combine to deliver for your business and your customer and to satisfy regulatory expectations

About the Author

I am an experienced, independent transformation consultant, catalyst, and “critical friend”, and offer extensive end-to-end experience of delivering complex regulatory change into an operational environment.

I am a veteran of the previous financial crisis, when, in an Irish Department of Finance approved role, I supported the Irish Bank Resolution Corporation’s implementation of the Central Bank Of Ireland’s industry-wide Mortgage Arrears Resolution Strategy as a lead consultant.

My experience includes supporting customers to define and improve policy, develop greenfield operations, interpret and respond to regulatory change, address the outcome of regulatory intervention, define and implement strategy, and to achieve improvements in operational efficiency and effectiveness through process design, knowledge transfer and upskilling.

Recent work has included an Arrears Management Modernisation project for a UK Lender, and a vehicle finance affordability project.

I have specialist subject matter expertise in areas such as mortgages, consumer credit, product/service design, vulnerable customers, arrears management/problem debt support, affordability, operational improvements, process design, outcome-orientated customer communication strategy, and training support.

My academic background includes lecturing in Organisational Behaviour, and my earlier financial services career has included product management, programme management, business analysis, systems development and operations.

Tessa Jenkins

[If you’re interested in working with Tessa and find out how she can help your organisation, contact Selena Tye on 0121 643 2100 or e-mail]

Vulnerable Customers: Innovation & Preparation

“Vulnerable customers” – it’s a phrase I’m sure we’ve all heard more times this year than we ever have before, and it’s not going away any time soon. The regulators are only just beginning to ramp up their scrutiny of how banks and Financial Services businesses treat customers who are experiencing a personal, medical or financial hardship. With all this discussion taking place, many firms I’ve spoken to are getting out in front of these issues now and adapting how they work with vulnerable customers in a number of interesting ways. How exactly are businesses preparing?

Training staff thoroughly on vulnerability is crucial. Front-line staff need to understand the different types of vulnerability and how they intersect, and from there they need to understand how to approach those customers. Beyond this though, there’s also huge value in training senior management and building a whole-organisation culture of understanding vulnerability and responding appropriately.

That can start with how management are interacting with staff – if your business is exercising more empathy to each other, that mindset will filter down to customer contact. This has become very important with staff working remotely, especially with employees who have started during the pandemic. If customer service staff are able to reach out to senior staff and have honest conversations about the difficulties they’re facing, that can develop a wider culture of listening and empathising. That interaction is also important in terms of the actual interactions with vulnerable customers – many organisations have installed systems to allow staff to quickly flag up that a difficult call is happening and get support live either from their manager or a designated Vulnerability Champion.

That idea of Champions is something many businesses are trying, in a few different forms. Some businesses have specially trained up more senior team members to become Champions within their own division. Others have created specialist Vulnerability teams who will shepherd a customer through every stage of their journey, across all departments.

Closely tracking the customer journeys of vulnerable customers is crucial in building up a bank of vulnerability MI. Organisations are recording data on the number of vulnerable customers, the types of vulnerability, what extra support is needed, how those customers situations are changing – but right now there seems to be a lot of uncertainty about where to take that data next and how it can be best used to improve the service offered to vulnerable customers.

That tracking does raise some GDPR questions. Recording details of a customer’s illness, for example, that had given them vulnerable status would be classed as “Special Category Data” under GDPR, requiring specific customer consent followed by careful thought about who has access to that data and how it’s stored. One possible approach to streamlining this is to instead of focussing on the type of vulnerability, focussing on the type of extra support the customer needs.

That kind of thinking is also driving some businesses to refer to their vulnerable customers via different terminology. Some customers who reject or resent the “vulnerable” label are more willing to declare that they currently need “extra support”, for example. This is just one challenge that businesses are facing around communication and identification. Many customers are not announcing vulnerability concerns until late in their journey. Capturing vulnerability at the first stage is important but can be tricky – especially in a digital environment. Customers completing a sign-up form online may skip over questions asking if they are experiencing vulnerability factors, out of fear of not getting the product they want, or because they don’t consider themselves vulnerable. Organisations need to consider how vulnerability is being treated in the digital journey and how they can best use technology to help with early identification – for example, some businesses track how long it takes customers to complete sign up forms and if someone has taken a lot of time over certain sections, they can flag that up with the contact staff.

Innovative thinking is also being harnessed to try to help vulnerable customers in a much wider sense than has previously been considered. Many businesses provide customers with details of support organisations and charities that may be able to help them – whether that’s debt relief or mental health counselling. There’s also a growing discussion about the possibility of cross-industry collaboration – for example if a consumer finance business learns that a customer is in a difficult financial situation, could they potentially also work with that customer’s utility providers and see what support they can offer? I expect we’ll see a lot of development in this area in the future.

Looking ahead, a concern for the immediate future is resource and talent. A number of businesses have expressed difficulty with recruiting the number of customer contact, complaints or collections staff that they would ideally need. Discussions are ongoing about how to approach this in the midst of the industry-wide labour shortage, but areas for consideration include rescoping what kind of people they’re looking for, and upskilling people from elsewhere in the business.

As we approach the upcoming publication of the draft rules for the new Consumer Duty, set to come into effect in July 2022, businesses need to seriously consider what kinds of work they need to do to ensure they’re compliant and can prove that they take the care of vulnerable customers seriously, and are providing a consistent high-quality customer experience for them. I think a successful vulnerable customer strategy is going to have to consider all of the previously discussed areas – MI, training, data privacy – working together to deliver the outcomes the FCA are looking for.

If you have concerns or questions about your organisation’s approach to vulnerable customers, contact me on 01216432100 or for a confidential conversation about how Kind Consultancy may be able to help.

Staying Competitive in the Candidate Shortage

It’s a strange time in the labour market. Although many aspects of the economy continue to recover from the lows of 2020, there are complex knock-on effects from the Covid-19 Coronavirus pandemic that will continue to shape the nation for a long time to come in unexpected ways.

One of those effects, which is of direct concern to us and our clients, is the current candidate shortage. The most recent REC numbers show that in the UK right now there are the fewest active jobseekers since records began 24 years ago. There’s no one easy answer as to why – most commentators agree that a key factor is people sticking with their current jobs for security during a generally uncertain time.

What’s important to consider for recruiters is how to attract and hold on to the good candidates who are available, and how to make your opportunities stand out to the people who do see them. In this market, skilled specialist candidates especially can pick and choose between the many open roles. So what drives their choices? From talking to candidates, I’ve identified the following key factors that shape their decisions right now:

  • Salary. We’re seeing pay rates rise to try to attract talent, with starting salaries for permanent staff currently increasing at the fastest rate on record.  Multiple candidates mentioned they were significantly more likely to apply for jobs that set out a clear salary in the job advert. There are a lot of reasons it isn’t always possible for a client to disclose this information publicly, but where it is possible, I would always encourage clients to do it.
  • Working from Home. We understand that not every role can function effectively remotely and not every company wants staff to be home-based. But for some candidates, who have now experienced entirely or partially remote work and found that it suits them, it’s now become a make-or-break factor in which jobs they will and will not consider.
  • Timeframes. The shortage of candidates means active jobseekers can take their pick of roles. Simplistic though it may seem, the length of the recruitment process is an absolutely vital factor right now, especially for contractors. If you want to put candidates through three rounds of interviews with weeks of waiting for feedback in between while your competitor is getting staff on-site within a fortnight of the first contact, candidates will almost always go with the job that starts them sooner. If ever there was a time to think about streamlining your recruitment approach, it’s now.

At Kind Consultancy we utilise a close collaborative approach with our clients, enabling us to help navigate these difficulties much more efficiently than would be possible with a traditional recruitment firm. For a confidential conversation about how Kind Consultancy can help to connect you to exceptional Financial Services talent, get in touch on or 01216432100.

The Kind 2020 Wrap Up

It’s been an atypical year for Kind. Though every 12 months delivers unexpected shifts and surprises, this was a particularly extreme one. I know this has been a tough year for many, both in business and at home, and I’m immensely proud of what the Kind teams have achieved across 2020 under such challenging circumstances.

As February and March progressed, it became clear that this was going to be a time unlike any we’d seen in the history of Kind, and there was very real cause for concern. The Kind Team however has more than risen to the challenge, exceeding the expectations I had of what we could achieve working remotely, rapidly adjusting to the new challenges faced by ourselves and our clients. It’s a testament to the hard work of everyone in Kind that we’ve grown the business and the team this year, and we even had a seamless relocation in the spring to our new Lichfield headquarters.

Kind Consultancy have had our all-time most successful year to date. Launched at the end of last year, our Kind Agile Solutions offering has been warmly received by clients and has enabled us to rapidly deliver full teams of highly qualified, expert contractors to time-sensitive and high-profile client projects. We’ve been approached by a range of new clients based on our reputation and word of mouth within the Financial Services world.

The team itself has grown, with the addition of Shai Cassidy, who has already helped us to work on large scale contract projects for some of the biggest names in Financial Services & Banking. The whole Consultancy team has had an incredibly busy year, and I want to thank them for rising to the challenge and continuing to deliver focussed hard work and outstanding customer and client service, whether at home or in the office. Every single member of the team has been promoted this year, which is a testament to their individual commitment and the quality of everything we’ve done in 2020.

Elsewhere, we have partnered with TieTa to offer our client’s outsourced contact centre solutions, and we’re just preparing to unveil another exciting avenue of support for our clients and candidates. Keep an eye out for that announcement in early January. We’ll also be looking to expand the team further next year, with both Operational and Consultant staff.

There were a few uncertain months of not knowing what was going to happen in the housing marketplace, but the Kind Financial Services team soon picked up and, thanks in part to the changes in stamp duty, our existing client base, and the relationships we have we saw an increase in enquiries, helping to deliver a very strong end to 2020. We have partnered with new Estate Agencies and have done a fantastic job of making sure that clients are being looked after during the process of purchasing a new property, re-mortgaging, or investing during these times. We are also as always looking to bring more advisors on board and have conversations ongoing as I write this to hopefully look to expand and grow into 2021.

Kind Commercial had an excellent start to the year with some large Development completions supporting our regular housebuilder clients, but as expected, once when we went into the first national lockdown, we didn’t know what was going to happen. We looked to support clients with CBILS applications and kept up communications with them and the team all adapted to working this way and looking to see what we could do to help. As soon as building recommenced, we were back up and running and have had a very robust end to the year with lots of new enquiries and some large Development deals being funded. We have also welcomed Mark Foley to the team, who had come on board as Regional Director bringing a wealth of knowledge and experience and we are all really looking forward to working with him in 2021.

Kind is all about collaboration, sharing knowledge and skills, and this year has seen us thinking more about how to work best across our disciplines – to this end Amy Davies and Miles Bradley from Kind Consultancy have been promoted to Group positions, now providing their specialist skills to all three of our operations. We have also continued to build mutually beneficial relationships with outside parties, with Kind Consultancy partnering with the Building Society Association and Kind Commercial partnering with a large mortgage brokerage as just two examples of the many ways we’ve kept on growing our reach and forming strong links across our industries this year.

In a year that has been so testing for many businesses, I am incredibly grateful that we have not just survived but succeeded in 2020, and I want to take this opportunity to once again thank every single member of the Kind Team for their contributions this year. It feels like just a few months since I wrote the year-end wrap up for 2019 and I love that about Kind – we are always pushing forward with our eyes on the next goal, and I’m excited and optimistic to see what we achieve next. For now, though, some much earned rest. I wish all at Kind and our clients, introducers and partners a very Merry Christmas and a Happy New Year, and I look forward to discovering the next chapter of the Kind story in 2021.

Mathew Kind

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