Learn about the EWA Code of Practice in the UK, developed by AnyDay along with the CIPP and 6 other leading providers, ensuring high standards and fair treatment in Earned Wage Access services.
Introduction to Earned Wage Access (EWA)
Earned Wage Access (EWA), also known as Employer Salary Advance Schemes (ESAS), Flexible Pay, or On-Demand Pay, is a revolutionary financial service that allows employees to access a portion of their earned wages before their regular payday. This innovation is the norm within payroll, with over 1 in 10 UK employers now offering EWA to their workforce. According to the CIPD Reward Management Survey 2022, the majority of workers would perceive an employer more favourably if EWA were provided.
The Birth of the EWA Code of Practice
In response to a recommendation from the Financial Conduct Authority (FCA), the Chartered Institute of Payroll Professionals (CIPP) has collaborated with AnyDay alongside six other leading UK EWA providers to establish the ‘EWA Code of Practice’. This Code aims to set a common standard for firms offering EWA products, ensuring they deliver positive consumer outcomes. To comply with the Code, providers must undergo regular independent assurance assessments, reinforcing their commitment to maintaining high standards.
Importance of the EWA Code of Practice
The EWA Code of Practice was created following the FCA's Woolard Review recommendation, which advocated for major employers to only engage with providers adhering to this Code. The FCA emphasized the importance of maintaining high standards to protect consumers and ensure fair treatment. As a result, the Code serves as a benchmark for quality and reliability in the EWA industry.
Key Components of the EWA Code of Practice
- Product Design and Value: EWA products should be designed to meet the needs of employees and offer fair value to consumers.
- Communicating with Consumers: Clear, fair, and non-misleading communication is essential, enabling consumers to make informed decisions.
- Vulnerability: Providers must ensure fair treatment and good outcomes for vulnerable consumers.
- Ongoing Consumer Support: Continuous support should be provided to help consumers realise the benefits of EWA products in achieving their financial goals.
- Product Governance: Providers must regularly review and manage EWA products to ensure they continue to provide fair value and meet consumer needs.
- Oversight and Measuring Outcomes: Regular monitoring of consumer outcomes is crucial, using appropriate management information.
- Appropriate Consumer Relationships and Conflicts of Interest: Maintaining appropriate consumer relationships and avoiding conflicts of interest that could harm consumers is vital.
- Training and Competency: Employees should be well-trained and competent to provide suitable service and support to consumers.
- Assurance: Providers must commit to annual assurance, verifying their compliance with the Code and their delivery of good consumer outcomes.
Independent Assurance Assessment
Providers adhering to the Code are audited annually by an independent body to ensure compliance. The first audit will take place in Q2 2024 and is open to all providers. Several providers have already expressed their interest in participating in the next audit.
The EWA Code of Practice marks a pivotal advancement in standardising Earned Wage Access services in the UK. Adherence to this Code showcases a provider's dedication to offering equitable and beneficial services to employees, promoting positive consumer outcomes and building trust within the EWA industry.
Curious about how EWA can benefit your organisation?
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