Consumer credit – taking the long term view


A huge proportion of my working life, and that of my colleagues, is spent speaking directly with clients – existing and prospective – about their online training needs.

Over the past six to nine months, we have all found through these conversations that across the whole spectrum of firms affected by the new consumer credit regulations – whether general insurance, current accounts, credit cards, savings, home finance and mortgages, life and pensions or investments – a bit of heat is being felt under a few collars.

That is always inevitable and understandable when something that could have a significant and costly impact on business practices within a firm is introduced. We saw exactly the same with the RDR, and MMR is also having the same reaction within the mortgage market.

With the FCA promising to rigorously pursue and take action against firms that are not complying with the new regulatory regime, the pressure is being felt, and whenever there is pressure, whether that is coming from regulators, managers or other avenues within the industry, comes the inclination to panic and make decisions for short-term benefit. Getting the proverbial monkey off your back to find a bit of breathing space is an appealing thought.

But the sense we have been getting from the coalface is that people don’t want that, and many have been on the front foot in making sure they have, or are getting, the right systems and checks in place to ensure they are consumer credit compliant, even if in some cases they are not 100% sure if they have covered every base that they are being asked to.

At the heart of the new regulation is the FCA getting a better deal for customers, against the backdrop of Money Advice Service (MAS) findings that nine million Britons are considered in serious debt and facing serious problems with debt, with just 1.5m having sought debt advice and 1.8m people not even acknowledging they are in debt.

The will and commitment to affecting behaviours, and embedding enhanced cultures of treating customers fairly to address this enormous ticking social time bomb, from our conversations at least, genuinely seems to be there.

But that is never going to be achieved through a tick box approach to attaining and maintaining compliance – a bit of bravery, nerve holding and, most critically, understanding, now is the only way to reap the business benefits into the future.

Base covering
One of the most daunting aspects for T&C and compliance teams dealing with having the FCA as their new regulator is knowing what it really means for them in a practical sense.

What do you already do sufficiently well? What don’t you do at all? What do you need to improve on? What responsibilities does it mean if you are an approved person? Do your employees know about and understand what the new regulation means? How do you decide what courses employees should take and provide recommended learning pathways?

Trying to make sense of things you may not fully understand can be extremely time, and energy, consuming.

Understanding consumer credit regulation, TCF, complaints handling, information security, data protection and risk management, are the core competencies for all employees working in the newly-regulated environment, while addressing financial crime and specialist / management responsibilities are intrinsically linked to these. Mortgage and home finance, Direct Debit and arrears and possessions are applicable to some firms and businesses too.

So where do you start?

Do As I Do
Accepting there is no quick fix is the first big step in putting in place a robust yet developmental programme that encourages enduring changes in behaviours and culture over time within an organisation. This includes everything from induction training to ongoing T&C and compliance maintenance and Continuing Professional Development.

It demands a training approach that does not treat compliance simply as a short-term ‘tick box’ exercise, but that enables employees to really get to grips with understanding how and why these issues are critical, and provides the opportunity to practically apply knowledge.

Technology provides outstanding opportunities to deliver genuinely in-depth, immersive, practical online learning through the use of video, outstanding graphics and other engaging multimedia experiences.

Combined with the fact that people’s lifestyles today are so mobile-led, learning that can be accessed 24/7 across the whole gamut of devices people use in their everyday lives can play a lead role in embedding the change of culture and behaviours in line with new regulation.

Using course content chunked up into smaller ‘standalone’ activities for you to create your own bespoke learning programmes as required, giving your employees the ability to digest ‘bite size’ pieces of learning on the move, is a proven means to reinforcing learning.

It is all about full staff engagement, all of which contributes to a long-term shift in mindset towards compliance, and the far-reaching benefits that employees being instinctively compliant can bring about, not just to the business but also that individual’s own career.

Shifting Public Perceptions
As treating customers fairly is the biggest driver behind the FCA move, it is only logical that complaints data, as well as news around FCA sanctions against failing businesses, provide a public gauge to the impact of the new regulation.

In April, FCA figures showed consumer complaints fell by 15% between July and December 2013, but that was 15% in what was otherwise, an overall, a 38% increase on 2012. Three-quarters of complaints at the backend of 2013 were still about PPI.

PPI will continue to tarnish the industry for a while yet, but there are green shoots of good news if you are prepared to look for them amongst the inevitably still dominant negative, often PPI skewed, headlines.

That 15% consumer complaints decrease is one, another is the number of complaints about banking products, such as current accounts, savings accounts and credit cards, falling by 3% compared with the first half of 2013, representing a 23% decrease since the second half of 2012 and the lowest half-yearly number of such complaints since H2 2006.

Isn’t this an indication that the messages around TCF are finally getting through? And, if that is the case, that a lot of firms are already doing many, if not all of the things, that will see them achieve FCA compliance, as well fostering more fruitful customer relationships?

Biting the bullet
Every day myself and my colleagues are seeing the diligence firms are displaying in trying to make sure they are across all elements of the FCA consumer credit requirements, with the vast majority recognising that a long-term vision will ultimately reap bigger rewards.

Our job is to try to make the process as smooth and painless as possible, by providing the advice, solutions, tools and reassurance that the path they are taking is the right one.

During its short lifetime, the FCA has repeatedly shown it is not afraid to flex its regulatory muscles, with record fines being dished out to firms not adhering to practices that support the FCA’s operational objectives.

But avoiding a fine should by a by-product of, not a motivation for, employing outstanding compliance practices.


 One of the most daunting aspects for T&C and compliance teams dealing with having the FCA as their new regulator is knowing what it really means for them in a practical sense.


About Author

Unicorn Training. Since 1988, we’ve created L&D and compliance solutions for the UK’s ever-changing financial services industry. We love what we do. You’ll love the results. Based in sunny Bournemouth and rainy London, our 25 years’ experience and award-winning creativity have helped us grow to be a market leader in our field. Quite simply, we give you what you want. We turn complicated language into everyday language and complicated policies into everyday scenarios. We don’t just teach you “what”, we explain “how”. No matter what your eLearning needs, we’ll listen to what you need and deliver an innovative solution just right for you. And to make your life easier, we can deliver it on our very own award-winning learning & performance platform, SkillsServe. The biggest compliment we’ve had from customers is that they keep coming back for more.

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