How Credit Firms Should Prepare Now
Every year, the pattern repeats itself. December is busy, noisy and commercially intense, but January is where the real pressure lands. Borrowing slows, reality bites, and customers begin to feel the consequences of decisions made during the festive period. For consumer credit lenders, brokers and digital credit platforms, January is not simply the start of a new year — it is the moment where financial stress, vulnerability and regulatory expectations collide.
The FCA knows this. It has long treated January as a natural stress test for firms’ Consumer Duty arrangements, their arrears processes, their ability to identify vulnerability and their operational resilience. And because the risk is entirely predictable, the regulator expects firms to plan for it before Christmas, not once the surge is already in motion.
Why January Always Brings Trouble
January combines three challenges that rarely occur together at any other time.
- Households are under unusual financial strain.
Many customers arrive in January having borrowed more than intended, used multiple credit products, relied on BNPL arrangements or drained savings to meet festive commitments. The shift from “holiday mode” to real-world budgeting is abrupt, and it shows in repayment behaviour.
- Arrears rise — sharply!
Even a minor gap between expected and actual income can push customers into missed payments or early arrears, especially those already on the edge. Firms that normally run comfortably through low-volume months can suddenly find their collections areas overwhelmed.
- Vulnerability peaks.
Emotional strain, health pressures, disrupted routines and financial anxiety all combine. Customers who were stable in November may present entirely differently by mid-January. Consumer Duty expects firms to recognise this and act on it.
These factors make January one of the clearest illustrations of whether a firm’s culture and controls actually work.
How the FCA Views January Risk
The FCA doesn’t treat January as a seasonal quirk — it treats it as evidence. If outcomes worsen in January, the regulator assumes the firm lacked foresight, not that the market changed. Under Consumer Duty, the starting point is simple: if harm is foreseeable, firms are responsible for preventing it.
The regulator will therefore expect to see clear evidence that governance, MI, customer support, affordability assessments and digital journeys have been shaped with January in mind. It will look for signs that firms anticipated higher arrears, strengthened support pathways, and adapted communications for customers under pressure.
It is also increasingly sensitive to the behaviour of introducers, affiliates and comparison sites during this period. These partners often push hardest in January, especially where credit repair or consolidation themes are involved. Weak oversight here is a growing regulatory concern.
Where Firms Typically Struggle
Despite knowing the pattern well, many firms stumble in the same places year after year.
One common issue is assuming that processes built for December will work in January. December can mask underlying weaknesses: digital journeys are designed for conversion, call centre teams focus on volume, and vulnerability signals are often diluted by festive sentiment. January exposes those gaps with little warning.
Another recurring problem is an over-reliance on automation. Decisioning models may not reflect short-term shifts in customer behaviour, and affordability assessments may not account for seasonal strain. If a firm cannot explain how its systems respond to post-Christmas pressure, the FCA will probe very hard.
And, of course, introducer activity becomes harder to control. Affiliates launch new campaigns, comparison sites try to capture “fresh start” sentiment, and some partners operate with less discipline than they should.
Many firms discover issues only after complaints arrive.
What Firms Should Be Doing Now
A well-prepared firm starts its January planning weeks earlier. This is the time to review how digital journeys guide customers under stress, how quickly vulnerable customers can access help, and whether forbearance options are easy to find and easy to understand. If customers must dig for support, the Duty is already undermined.
Operational readiness is equally important. Firms need enough staff trained for early arrears conversations, not just core collections. They need clear escalation routes for customers who disclose vulnerability. And they need to ensure someone senior is visibly accountable throughout the holiday period — something the FCA increasingly checks.
MI deserves the same attention. January requires data that reveals early warning signs: sudden changes in payment patterns, shifts in customer behaviour, unusual call volumes or recurring issues in digital journeys. The best firms use this MI not simply to monitor outcomes but to correct course quickly.
Finally, distribution oversight must tighten. Introducers should be reminded of expectations, promotional materials should be sampled, and firms should be confident their products are being sold — or recommended — in line with agreed standards. Consumer Duty requires nothing less.
How ALPH Can Support Your January Readiness
ALPH works with lenders, brokers and digital credit firms to prepare for the most challenging month of the year. We provide early-year risk assessments, Consumer Duty readiness checks, forbearance and arrears reviews, digital journey testing, oversight of introducers and affiliates, and operational resilience assessments designed specifically for the January spike.
With the right planning, January becomes far less daunting — and far more manageable. Firms that prepare now will enter the new year with confidence, clarity and a meaningful advantage.
Contact our team to help you remain compliant