Addressing Industry Challenges - Customer Behaviour, Affordability and the Credit Landscape

On Thursday 20 November I had the pleasure of sharing a panel discussion at the Credit & Collections Technology Think Tank event alongside three fantastic panellists, and masterfully Chaired by Chris Warburton. 

In the Addressing Industry Challenges session we covered key areas including what pressures are shaping customer behaviour, affordability and the overall credit landscape. I highlighted that customer behaviour is being shaped by misinformation and the curse of social media platforms, template letters and poor and inaccurate 'advice' on the internet. Cost of living pressures appear to be pushing people away from seeking appropriate debt advice and instead searching the internet for answers, where people are often greeted with pages of template letters and "ways to get your debt written off", which is causing real consumer harm and a serious barrier to engagement. The CSA has just released a report on this area, and the Misinformation: Addressing and preventing consumer harm paper can be viewed here.

We also discussed how the ever-changing regulatory framework is one of the main challenges facing the industry, particularly around the motor finance redress scheme and how an overly generous redress scheme could set the bar for any future redress, and also risks setting consumer expectation just as high. We also touched upon the Financial Ombudsman Service (FOS) having differing interpretations, and how both FOS and the Financial Conduct Authority (FCA) could potentially impact on investment in the sector. Unknown liabilities are not appealing!

When asked whether we think the government's pledge to cut regulatory costs by 25% has translated into any relief yet, the firm answer from the panel was "no". I said government had to be bold, and pushed our recommendation that FOS should be subsumed into FCA, which would be a sensible way for government to address issues with FOS, and at the same time making significant savings on regulatory costs.

The panel were asked whether current regulatory approaches - particularly around data, affordability and Consumer Duty - are improving customer outcomes, or creating unintended burdens. I reiterated again the concerns relating to misinformation, the burden on firms, and the real consumer harm as a result, and shared the example of the class between the motor finance redress scheme and data protection law. Firms who have followed their data retention policies have been placed in a worse position by the scheme as data from 2007 will undoubtedly be unavailable, with practices back then being to delete data, rather than anonymise it. And of course, the FCA recently consulted on deferred payment credit and proposing that maybe 50% of the lending won’t be subject to an affordability assessment which will leave a vacuum.

Vulnerability and use of tech and AI was also a topic of discussion and the panel all agreed that while tech and AI can certainly broaden the scope, there still needs to be accountability for decisions, who is accountable, who made the decision and who wrote the algorithm that is choosing when to give forbearance. Have you got effective processes for picking up biases, or are you risking poor identification and poor treatment? I hailed the high standards of practice of CSA Members, sharing that members are effective at identifying and supporting vulnerable customers, and of the positive influence of the CSA Code of Practice.

Finally, we were asked to look ahead to 2026 and what we think the future holds. There was clear consensus that AI will be around, with a focus also on misinterpretation about the sector and tackling misinformation. All eyes will be on motor finance and, of course, what Consumer Credit Act (CCA) and FOS reform will look like. I concluded with the important message that firms should continue to engage with their trade bodies, who are best placed to support firms throughout 2026 and beyond.