TR: Early arrears management in unsecured lending

Find out about the background to and purpose of our thematic review of early arrears management in unsecured lending. We set out our proposed approach and overarching timescales.


In our Business Plan for 2015/16 we said we will examine the ways in which unsecured consumer credit debts are collected, and the extent to which firms involved in the recovery and collection process are following our rules, treating customers fairly and showing appropriate forbearance.  Having conducted initial analysis we have decided to focus this work on the early stages of the collections process: how customers are treated by lenders when they first experience arrears and payment difficulties.

We are focussing on this aspect of the collection of debts because the ways in which firms engage with customers in the early stages of arrears can be critical to the ultimate outcome for those customers. A firm’s early arrears approach often establishes the tone of its relationship with customers and sets the customer on a particular path.


This is a ’discovery’ thematic review. Its aim is to examine how lenders treat customers in early arrears and what the outcomes for those customers are. The review will test whether firms have due regard to the interests of their customers and exercise appropriate forbearance.

We will assess firms to see whether their treatment of customers in the early stages of arrears is compliant with our existing rules, including the Principles for Businesses, and consider whether good or poor practices are employed.

The review will build upon our previous review of arrears and forbearance in the specific area of high-cost short-term credit, broadening our focus to examine arrears in a range of unsecured lending products, including personal loans, credit cards and retail finance.

At the conclusion of the review, we intend to publish a report setting out our findings and detailing any action we expect relevant firms to take.

Who will be interested in this review?

This thematic review will be of interest to lenders and other firms involved in the collection of consumer credit debts. It will also be of interest to trade bodies representing these firms, firms and other bodies that provide debt advice and solutions to consumers and consumer representative groups.

Our approach

  • Our work will involve reviewing information such as firms' policies and procedures, testing consumer outcomes using file reviews and visiting firms to interview and observe staff involved in firms' arrears management and collections operations
  • Stage one: desk based review of firms' early arrears strategies, policies and procedures and operational structure
  • Stage two: customer file review to test consumer outcomes
  • Stage three: site visits to firms
  • Feedback results to firms and action taken if required

Next steps, timeline and other review developments

We undertook our stage one work and stage two case file reviews in 2015 and early 2016. The stage three firm visits have also now been completed. The findings at each stage have shaped our approach going forward and we will publish a report of our findings in Autumn 2016.

  • Stage one information request: August 2015
  • Stage one analysis: Q3-Q4 2015
  • Stage two: Q4 2015 - Q1 2016
  • Stage three visits: Q1-Q2 2016
  • Analysis and conclusions Q2 - Q3 2016
  • Reporting: Q4 2016

More information

PS14/16: Detailed rules for the price cap on high-cost short-term credit - Including feedback on CP14/10 and final rules