Making the vulnerable more vulnerable? Why the autumn budget demands action from collections leaders 26 NOVEMBER 2025

4 minute read

The Autumn Budget has landed and for millions already struggling, the message is clear: the vulnerable just became more vulnerable.

Frozen tax thresholds. Rising inflation. Limited relief. Financial resilience has never been under more pressure. For banks and lenders, this isn’t just compliance, it’s survival.

Because here’s the truth:

Every policy change ripples through household budgets.
Every missed opportunity to support vulnerable customers increases risk for creditors.
Every delay in adapting systems and processes could cost millions in arrears and reputational damage.

Vulnerability will rise. The only question: are you ready?

Customers are reaching breaking point

The budget confirmed what many feared:

Income tax thresholds remain frozen until 2030, pulling more households into higher tax bands.
Inflation sits at 3.6%, keeping essential costs high.
Targeted support is modest, leaving millions in negative budgets where income doesn’t cover essentials.

For vulnerable customers, this means less breathing room, more reliance on credit, and greater risk of falling into arrears. For financial institutions, the stakes are clear: rising defaults, increased complaints, and heightened regulatory scrutiny under Consumer Duty.

And here’s another signal of stress: second charge mortgage lending is booming. In September 2025 alone, new agreements grew 22% year-on-year, and lending hit £202 million (up 36% from last year), the highest monthly total since 2008. Over 12 months, lending reached £1.99 billion, with nearly 60% used for debt consolidation. This surge shows households are tapping home equity to stay afloat, a clear indicator of financial strain.^[1]

Creditors will feel the impact of the budget too

The Autumn Budget and rising second charge lending aren’t isolated trends, they’re symptoms of a deeper vulnerability crisis. For collections and recoveries leaders, this means:

Higher vulnerability risk across portfolios - Customers are facing squeezed incomes, rising costs, and limited support. Vulnerability isn’t static, it’s increasing. One in 14 households with children now faces a negative budget as income doesn’t cover essentials.
Potential for increased arrears and defaults - Debt consolidation through second charges signals customers are running out of options. If conditions worsen, arrears will spike.
Regulatory scrutiny under Consumer Duty - The FCA expects proactive support for vulnerable customers. Failure to act risks enforcement, reputational damage, and financial penalties.
Operational and technology pressure - Legacy systems can’t keep pace with regulatory change or customer needs. Modern, agile platforms are essential for compliance and customer care.

So, what can organisations do right now to protect vulnerable customers and future-proof their collections strategy?

Creditor responses to the budget will make or break outcomes

This is the moment to move from reactive compliance to proactive customer care. Here’s how:

Train your people to spot vulnerability - Equip frontline staff to identify distress signals and signpost customers to support, whether that’s debt advice, benefits guidance, or mental health resources. Combine this with customer-centric strategies, creating personalised journeys for vulnerable customers rather than one-size-fits-all scripts.
Harness AI for real-time insight - AI-driven speech analytics can detect stress in calls, flag vulnerability, and prompt agents with tailored scripts. Pair this with data-driven decisioning using analytics to predict vulnerability before arrears occur, enabling early intervention.
Use digital I&E tools to unlock hidden capacity - Income & Expenditure tools integrated with open banking can reveal benefits customers are entitled to but aren’t claiming, helping them maximise income and improve repayment capacity.
Meet customers where they are - Digital engagement matters. Gen Z prefers apps and chat, while older generations may need voice or branch support. Offering multiple channels ensures vulnerable customers aren’t left behind.
Keep systems modern and agile - If the budget triggers new regulatory obligations, legacy systems will slow you down. Modern, configurable platforms allow rapid adaptation avoiding costly workarounds and compliance risk. For added resilience, consider outsourcing or managed services to scale quickly and maintain service quality during periods of high demand or regulatory change.

Doing nothing isn’t an option - Why acting now will pay off

Supporting vulnerable customers isn’t just about doing the right thing, it’s about protecting trust, reducing arrears, and staying firmly ahead of Consumer Duty expectations. Those who act now will be the ones who turn regulatory pressure into genuine competitive advantage.

With tighter affordability rules and deeper scrutiny of vulnerability reporting expected in 2026, creditors can’t afford to rely on legacy systems that slow them down and increase compliance risk. The next 18 months will demand stronger governance, smarter technology, and a more proactive approach to customer support.

This is exactly where Arum Global can help. Our expertise in vulnerability strategy, data insight, collections technology, and end-to-end journey design equips creditors to modernise quickly, meet regulatory standards with confidence, and deliver the kind of support customers increasingly expect.

Take a look at our helpful resources below or contact us directly to discuss your needs.

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About the author

Hasib Ahmed
Principal Consultant

Hasib is a specialist in collections and recoveries with over 15 years of experience across various sectors, including retail, banking, and telecommunications. He has worked with clients in the UK and internationally, playing a key role in multimillion-pound transformation projects, including the implementation of telephony platforms and collections systems. His expertise spans the full software development lifecycle, data certification, system migration, process improvement, system design, training, and testing.