For those individuals or organisations looking to outsource debt collection work, it is worth taking time to work out a list of priorities of what they want from a service provider. Value for money is likely to be top of the list (especially for those businesses that are still recovering from the effects of the economic downturn). Another item that ought to be high in any list of priorities is fair treatment of customers.
Those organisations unfamiliar with the workings of the debt collections niche may assume that fair treatment of customers is more to do with pure ethics and bears little or no relationship to achieving successful outcomes. In fact, as the leading UK debt collection agency Wescot demonstrates, fair treatment of customers tends to result in outcomes from which all parties benefit. This particular company has been at the forefront of best practice and has a proven track record when it comes to setting an example to other operators within this niche.
Use of technological solutions has an important part to play in this particular sector, as Wescot is well aware. Many companies use ‘smart data’ tools in which databases are cross-referenced as a method of tracing customer with whom organisations have lost contact. These can be useful but they can also have their limitations. One issue is that the majority of operators in this field use similar types of credit reference agency lead-generation data tools. The same information and data sources tend to be accessed on multiple occasions. If part of that information happens to be incorrect, multiple mis-traces can happen. It can be all too easy to assume the data is valid when in fact it is not. One of the unfortunate consequences of this can be that third parties are contacted in error on multiple occasions by multiple organisations.
Wescot knows that technology, when used in isolation or when put to use by inexperienced staff can have its limitations. When it comes to tracing customers, the company uses effective validation technologies coupled with experienced staff. Once a likely trace has been established, the company also recognises the value of re-establishing meaningful contact with that customer. This provides the opportunity for outstanding issues between organisations and their customers to be resolved in a manner that is appropriate to the circumstances of the customer.
Some organisations may be tempted to look for a ‘quick fix’ approach to tracing customers with whom they have lost contact. This is especially the case in the current economic climate where companies are keen to keep overheads to a minimum as they recover from the deepest recession for decades. A trend over recent years has been the development of ‘data cleansing’ solutions. These are often referred to as ‘light touch’ indicators of where an individual customer may currently be living. This approach is often coupled with treating all or the majority of gone-away debt scenarios as ‘trace and collect’. This type of approach might be appropriate in many situations. As Wescot is aware however, businesses may be missing out on valuable opportunities if they rely solely on this type of method. An organisation may find there are considerable advantages to making actual and meaningful contact once customers have been traced.
Rather than taking formal action against the customer once he or she has been re-located, there is a lot to be said for making contact and attempting to resolve the outstanding issue in a sensible way. Responsibility for regulation of the consumer credit niche has now been transferred from the Office of Fair Trading to the Financial Conduct Authority. One of the implications of this is that there is a much greater emphasis on delivering outcomes appropriate to the customer as an individual. Taking a one-size-fits-all approach is no longer acceptable. Rather, companies need to have procedures in place that take into account the personal circumstances of the individual. There is certainly room for high-tech solutions in the tracing and debt collection (especially when it comes to data validation, appropriate data handling and avoiding the type of situation where third parties are repeatedly contacted in error). At the same time however, organisations should also seek out those agencies who appreciate the value of engaging with customers in an effective way.
There is also an important reputational element to this. It is no longer acceptable for organisations to decide on a certain course of action merely because letters and telephones have gone unanswered. Organisations that engage in inappropriate behaviour risk serious damage to their brand image. Wescot is a natural choice as the provider of trace and debt collection solutions for organisations looking for a company with a proven track record in both data validation and treating customers fairly.
Organisations choose to outsource their debt collections activities for a number of different reasons. First and foremost, many realise they do not have the resources or the time to deal effectively with debt collection work in-house. Under such situations, referring the work to a professional makes perfect sense. When choosing a partner to work with, cost effectiveness is generally at or near the top of an organisation’s list of priorities (especially at a time when many businesses are still in a state of recovery following the deepest and most prolonged economic downturn in decades). At the same time, it is important to pay close attention to a potential partner’s attitude to compliance. In particular, organisations should look closely at whether a debt collection agency is committed to treating customers fairly.
Most companies will claim in their promotional material to be committed to compliance. For anyone choosing a debt collection agency to work with, it is worth looking closely at such claims to check whether there is any substance to them. Wescot is a company worthy of particular consideration. This leading UK debt collection agency believes strongly in the importance of treating customers fairly. The company says such an approach is vital for achieving appropriate outcomes for individual customers.
The approach also brings considerable benefits to the organisations it works for. By engaging customers in a meaningful way, it makes it more likely that appropriate solutions can be worked out. It means, for instance, that agents and customers are able to come up with repayment plans that are achievable in light of the customer’s individual circumstances. This is far preferable to imposing a plan on a customer with little or no thought as to whether that customer is going to be able to stick to it. The approach adopted by Wescot makes it much more likely that the arrears will be recovered. It also increases the likelihood that the relationship between the customer and the business in question can be rehabilitated.
There is plenty of evidence to indicate Wescot takes ‘treating customers fairly’ seriously rather than paying mere lip service to the principle. The company carries out regular audits and is dedicated to regular monitoring. The company also recognises how important it is for customers to have access to free independent debt advice and is an active supporter of a number of charities in this field.
A trend of recent years is that some of the standards and general practices prevalent within the consumer credit industry have been brought into sharp focus. Organisations need to take the issue of compliance seriously. They also need to be careful with their choice of partner in those circumstances where debt collections and tracing services are outsourced. It is natural for businesses to seek cost-effective solutions (especially at a time when many organisations are still recovering from the effects of the economic downturn). Equally as important however, it is worth finding out more about the proposed agency’s attitude to compliance. One useful piece of advice is to identify those companies that have the processes in place to ensure the whole business operates in accordance with the spirit of the regulations – rather than attempting to do the bare minimum to stick to the rules.
Wescot is a very good example of a company that has compliance at the heart of its business. This commitment to treating customers fairly has advantages not just for those individual customers, but also for the organisations it works with. By treating customers with professionalism and fairness, there is a greater chance of coming up with solutions that are acceptable to businesses and realistically achievable by individuals.
Wescot has always rejected the type of practices that in the past have given debt collection agencies (and by association, the organisations they carry out work on behalf of) a bad name. Such behaviour included overly aggressive correspondence, constant non-productive phone calls and visits in person conducted in an inappropriate manner. Now more than ever, such behaviour is likely to result in an agency and/or the organisation it is working for being publically admonished by the authorities. The business model adopted by Wescot and its attitude to compliance provides a useful benchmark to other organisations involved in debt collections work. The industry-wide guidelines that are now in place are designed to ensure customers are treated fairly. In practice, this means all operators in the field should aim to conduct themselves in the same manner as this company.
Organisations also need to be increasingly aware of their wider brand image and of how easy it can become tarnished. For a customer who believes he or she has been treated unfairly when it comes to resolving an arrears issue, it has never been easier for that customer to share his or her experiences publically.
Where an organisation needs to re-establish contact with its customers, the temptation may be to concentrate solely on trying to find the quickest and cheapest option on the market. Against this backdrop, some businesses may be tempted to choose what is often referred to as a ‘data cleansing’ product to provide a light-touch indication of where a customer is likely to be currently residing. In some circumstances, such a product is probably going to do the job it is designed to do perfectly adequately. In other situations though, such an approach could result in missed opportunities for the business concerned. If it was to be used in isolation, this type of solution could end up doing little or nothing to help the organisation rehabilitate its relationship with the customer in a meaningful way and in a manner that is potential beneficial to both parties.
Wescot points out that once a likely location has been identified for a previously gone-away customer, there is a lot to be said for attempting to make actual contact with that customer. Assuming of course, the agent involved in this is has the requisite skill-set, effective face-to-face re-engagement makes it much more likely that a solution to the outstanding issue will be worked out that meets the needs of the business in question and at the same time, is realistically achievable from the customer’s perspective. Wescot is a leading UK debt collection agency that appreciates the value of treating customers fairly. This ethos has obvious benefits to the customer. It has advantages for the business too. It makes it much more likely that a meaningful relationship between the organisation and the individual can continue to exist after the issue in hand has been sorted out.
Once a likely location has been identified for a previously gone-away customer, there are also advantages to making actual and meaningful contact from a compliance perspective. Under the current regulatory framework, it is no longer acceptable for a company to press on with formal action and to ignore the fact that telephone calls have gone unanswered or that letters have not been responded to. Nor is it acceptable to engage in aggressive door stepping or other forms of inappropriate behaviour. As well as falling foul of the regulations, such behaviour is likely to have significant reputational repercussions for the company involved.
So far as the credit services sector is concerned, a lot of changes have occurred over the last five years since the beginning of the economic downturn. Some of those changes have come about as a consequence of the new regulatory framework ushered in by the Financial Conduct Authority (FCA). Other changes are linked to the habits and circumstances of consumers.
Before 2008, there was a much higher prevalence of interest-only and high loan-to-value mortgages. Over the last five years, these products have either disappeared completely or else have become much less common. This has implications for those companies who operate within the credit services industry and whose services include attempting to make contact with customers with whom businesses have lost contact. More individuals (especially would-be first time buyers and younger people) are more likely to be living in short-term rental arrangements. There is also a greater likelihood that customers are living with friends or family under informal arrangements. For those involved in the consumer credit industry, this can make it difficult to differentiate between the type of scenario where a customer has moved on and has merely forgotten to update his or her contact details and those situations where customers are actively trying to ignore attempts to re-establish contact.
What has also happened over the last few years is that more organisations are relying on ever-more technologically-driven methods of tracing customers. As Wescot understands, there is definitely a place for technology when it comes to validating customer details and ensuring that customer contact details and other information is correct. As far as Wescot is concerned, this is all part and parcel of treating customers fairly. Nevertheless, there may be limitations to relying solely on what is generally referred to as ‘smart data’. The company points to a noticeable correlation between the use of smart-data driven products on the one hand and an increase on mis-trace situations across the industry as a whole on the other.
Technology is a useful tool; but so is proven experience. Wescot is regulated by the Financial Conduct Authority and is a member of the Credit Services Association. The company has the processes in place to ensure full compliance with those bodies’ rules and guidelines. The company successfully combines up-to-date validation processes with vast experience in the field.
In keeping with an increasingly customer-centric approach towards collections taken by the debt recovery industry in the UK, leading agency Wescot has worked to ensure the development of enhanced arrangement management processes. The improved processes will help make certain that reasoning behind defaults is understood and also to enable appropriate action when needed to maintain an affordable repayment plan. The improved arrangement management will help determine what should be done in a given situation, taking into consideration any changes that have occurred in the circumstances of the customer.
A review of Wescot’s collections performance over the 12-month period before September 2013 demonstrated a significant increase in overall collections delivery from prime banking stock across that period. The improvement, in excess of 15%, occurred although the market has been experiencing economic and regulatory pressures that might have been expected to induce a downward trend. The shape of recovery curves is being altered by customer-centric and other practices that have recently come into use in the debt recovery industry. There has been a greater focus on delivery of top-quality customer contacts, alongside investment in improved and ongoing processes of arrangement management. There has also been more of a focus on productive customer engagement and working on delivering repayment plans that are sustainable.
While lower contact conversion rates have been observed, with a coinciding reduction in initial break-in delivery, this has not prevented uplift in collections delivery trends. The uplift can be credited in part to improved stick rates and the benefit built from them in the long run. That in turn provides an explanation for the significant growth in established, paying stock’s value that Wescot has recently observed. The current collections trends indicate the increasing embedded value of recoveries stock. A larger number of truly sustainable repayment plans are being established and managed in the industry, driving that increase in value.
The long-term benefits of positive customer engagement is shown by these recent results, with more appropriate outcomes for lenders and individuals emerging from a compliant collections approach. Debt collection agency investment in analytical capability as well as technology is vital to the success of this approach, as it provides for the optimisation of positive contacts. Further, organisations should invest in agent development so that customer interactions can be of a consistently high quality. A strong long-term collections curve is likely with a sustainable cash flow coming from repayment stock.