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.
red 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.
Goneaways have become more difficult to identify for debt collection agencies, complicating tracing methods utilised in order to access and interact with customers. It used to be the case that all goneaways could be identified quite easily and treated equally, but major changes in the industry and in housing have made this much more difficult. The industry is facing the challenge of ensuring that organisations avoid repeated, contact with third parties to whom the relevant accounts do not belong. Such incorrect contact has significant consumer impact and this is among the issues Wescot, along with other ethical debt collection agencies, wish to resolve.
Also of relevance is the fact that the way organisations interact with customers has changed dramatically over the last few years. In many b2c relationships, the vast majority of contact is online. If it is a longstanding relationship which suddenly turns into a non-contact scenario, the challenge faced by a business is to consider whether the last known physical address and telephone details for that customer are correct. In this climate, many businesses are likely to benefit from effective early arrears reconnection services. Not only can this approach maximise the chances of recovery, it can also increase the chances of rehabilitating the relationship between the customer and the organisation. Businesses are likely to benefit from approaching a company with a proven track record in customer tracing. Wescot for instance, employs a highly experienced locate team coupled with an effective validation process – both of which combine to help re-establish contact between customer and client.
By looking closely at the way this company operates, it is possible to see how it has managed to achieve considerable success against what may be regarded as a ‘difficult’ financial landscape. For one thing, the company aims to treat customers fairly and to engage with each customer in an effective manner. In this way, it is possible to open up a constructive dialogue and to come up with a realistic repayment plan. This is in marked contrast to the bad practices that previously earned the sector a bad name and which Wescot has always rejected. Such practices include poor tracing methods – including doing little or nothing to verify customer contact details to try and ensure they are as up to date as possible. Other examples of bad practice include aggressive letters, an excessive number of phone calls and uncontrolled doorstep visits.
The phrase ‘Compliance’ covers many areas. It affects all parts of a business and how it operates, including not just the firm’s policies and strategy but also the way in which it communicates with each individual customer. Taking compliance seriously means having the governance arrangements in place to ensure a consistent approach throughout the entire business. Looking carefully at the regulations and guidelines that are relevant to the particular organisation’s activities is obviously important. Equally as important is ensuring that the practices conducted by the business are in accordance with the spirit of those regulations.
A model debt collection agency is one that has compliance at the heart of everything it does. For anyone looking for a debt collection solution from a reliable company, it is worth paying particularly close attention to Wescot. This leading UK debt collection agency is not only a leading member of the Credit Services Association, it has also been active in helping to shape and improve practice standards for the consumer credit industry as a whole.
By making actual and meaningful contact with a customer once he or she has been located, it provides far greater opportunity to deal with the arrears issue in an effective manner. Re-engagement makes it possible to treat customers fairly and work out a repayment plan that is acceptable to both the individual customer and to the organisation. It also opens up the possibility of rehabilitating the relationship between business and customer. From this perspective it can be seen that there is a place for basic data validation but at the same time, this should not be seen as a cheap and easy alternative to a product focused on delivering live customer contact.
For the credit services industry (and particularly those parts of the industry whose activities include tracing customers with whom organisations have lost contact), changes to the housing market over recent years have had significant implications. The high loan-to-value mortgages and interest-only deals that were common prior to the 2008 downturn have now either disappeared completely or have become an extreme rarity. This means greater numbers of people are living in short term rental arrangements or else are living with parents or other family members under informal arrangements for longer periods of time. For the consumer credit industry, this means it is often harder to differentiate genuine ‘goneaway’ scenarios from those situations where an individual is intentionally ignoring all attempts to make contact.
An integral part of collecting debts is the trace procedure, which is why companies like Wescot are able to find the customers and begin the collection process. Given that the company will only receive payment from a client once the collection has been made, it is important that the trace procedure is as efficient as possible. Customer’s residency is a common issue with tracing as residency is far more fluid and transitional than in years gone by. With the rise in people renting as opposed to getting a mortgage, customers are able to move around a lot quicker, which makes for a large number of mis-trace results if data sources are not cleansed regularly.