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What is PS24/2?

The FCA’s PS24/2 Strengthening protections for borrowers in financial difficulty came into force in November, replacing the Tailored Support Guidance (TSG) to provide a stronger framework to protect consumers facing payment difficulties, principally by incorporating relevant aspects of the TSG into the Handbook.

A new focus on Consumers “approaching arrears”

The updated regulation and guidance have specific provisions addressing the treatment of consumers approaching arrears — those who may not yet be in arrears but are showing signs of Industry talks about financial difficulty and could soon face problems meeting their financial obligations.

In practical terms, this means lenders are now required to take proactive steps to identify and support these consumers before they fall into arrears. This is a preventative approach, aiming to reduce the risk of severe financial hardship by ensuring that struggling consumers receive appropriate support early on. The regulation makes it clear that firms should prioritise actions such as:

• Early identification: Lenders are expected to have mechanisms in place to identify consumers who may be at risk of falling into arrears. This could involve monitoring spending patterns, missed payments, or changes in consumer behaviour that suggest financial stress.
• Proactive engagement: Once potential financial difficulties are identified, lenders are required to engage with these consumers in an appropriate way. This engagement should be sensitive, empathetic, and aimed at understanding the consumers’ individual circumstances.
• Tailored support: PS/24 mandates that lenders offer tailored support options, including flexible payment plans or access to financial advice. Importantly, any support offered should aim to keep the consumer on track without causing additional financial strain.
• Transparency and clarity: Consumers approaching arrears should be provided with clear and understandable information regarding their options. This ensures they’re aware of the steps they can take and how lenders are available to help.

Underpinning all of the above, are the Consumer Duty principles and rules. Early identification, proactive engagement, tailored support and transparency all support delivering good outcomes for consumers.

How to ensure best practice

For lenders, PS24/2 introduces an additional layer of compliance but also provides an opportunity to enhance consumer relationships and reputation. However, adapting to this regulation will in many cases require lenders to implement new processes, data analysis techniques, and training to ensure staff are equipped to recognise and assist pre-arrears customers effectively.

1. Data and monitoring systems: Effective monitoring of consumer accounts for signs of financial stress will be essential - which may require investment in data and analytical capability. When combining this with the Consumer Duty principles, it is important to understand the consumer’s wider commitments across regulated and unregulated debts. This will enable a holistic assessment of the consumer’s circumstances and help ascertain the best action to be taken.
2. Training and development: Lenders will need to ensure their training programmes enable staff to handle pre-arrears situations with sensitivity. Customer service and collections teams should be familiar with the indicators of financial vulnerability and know how to engage with customers empathetically.
3. Communication channels: Lenders should evaluate the accessibility and clarity of their communication channels to ensure that consumers can reach out easily for support, paying particular attention to those with characteristics of vulnerability.
4. Forbearance options: Delivering a good outcome requires a range of forbearance options that are appropriate for the consumer’s individual circumstances - ensuring any arrangements are sustainable and affordable. Operationally there should be processes that review these periodically to ensure they remain suitable.

The road ahead to a new era of financial support for consumers

The FCA’s PS24/2 represents a proactive shift in how the financial industry is expected to support consumers, particularly those approaching arrears. This supports alignment with Consumer Duty cross-cutting rules, as it will help firms demonstrate they are taking reasonable steps to avoid foreseeable harm, acting in good faith and enabling and supporting consumers to pursue their financial objectives. 

While this may require substantial adjustments by lenders, the overall impact is to drive benefits for consumers, especially those who may be on the edge of financial difficulty, including for example:

• Earlier intervention: By identifying potential financial issues early, consumers can receive assistance before their situation escalates. Engaging with consumers at an early stage can be critical to the ultimate outcome.
• Tailored solutions: Each consumers’ situation needs to be considered on its own merits, and lenders are required to recognise this, providing solutions that fit individual needs rather than a one-size-fits-all approach.

The regulation encourages an industry-wide shift toward fairness, transparency, and proactive care - values that ultimately aim to create a more resilient and consumer-focused financial landscape.

For lenders, PS24/2 presents a chance to foster trust and loyalty by genuinely prioritising consumer welfare. And for consumers, this regulation brings a promise of increased support, earlier interventions, and greater protection in an uncertain financial environment.

Equifax Ltd is one of the Equifax group companies based in the UK. Equifax Ltd is authorised and regulated by the Financial Conduct Authority. For more information, visit equifax.co.uk.