Improving Trace Procedures

wescotAn 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.

Another significant change to the way that debts are collected is the switch from the Office of Fair Trading to the Financial Conduct Authority (FCA) as to which body regulates debt recovery and management. The FCA has enforced new rules regarding the image of the industry as a whole and how customers are treated once they have been found. ‘Goneaways’ is the term used for customers who cannot be contacted and it is estimated that 30-40% of those who have not replied are in fact a goneaway. The FCA has ruled that companies can no longer ignore a goneaway customer.

There is one important way in which companies such as Wescot can continue to thrive despite the fluid nature of customer residency, as well as not only abiding by the rules as set down by the FCA, but embracing them. Contacting customers is the only sure way to validate the data as presented by a credit reference agency (the common database provider that many debt recovery agencies use). A potential solution to this growing problem of goneaways is using a service that relies on live customer contact. This will ensure that the company is in line with the FCA’s requirements to improve customer service.

Tracing costs money as much as it costs the company time to complete a successful trace. By creating a new live customer contact product, debt recovery companies will see a greater improvement in a number of aspects.

Changes in compliance standards

The debt recovery industry has experienced significant change in recent times as many debt recovery agencies look to combat the economic downturn and maintain high collection rates. A significant change is in relation to compliance standards and the associated improvement in relationships between agencies and those individuals wescotinvolved in the recovery process. The financial services sector has suffered from decreasing levels of consumer confidence in recent times due to the current financial climate and the banking crisis. In order to rebuild trusting relationships with consumers, the industry has attempted to improve how debt collection agencies contact individuals, how they communicate with them and also how they recover the debt itself.

Compliance covers a whole host of aspects within all formats of business. It concerns the compliance of each company with regards to meeting regulatory requirements. Regular assessments and checks take place to ensure that companies are complying with industry standards and acting in a professional and honest manner at all times. It is hoped that changes in compliance standards will help to restore consumer confidence in the financial services sector.

Historically, debt recovery agencies have been somewhat aggressive in their pursuit of debt. Excessive phone calls, home visits and aggressive letters were prevalent with regards to the debt recovery process. Changes in the rules and regulations and increased levels of compliance by debt recovery agencies such as Wescot has resulted in improved relationships and increased communication quality between both parties.

The handover of responsibility from the Office of Fair Trading to the Financial Conduct Authority has had a big impact on regulations within the industry but credit must also be given to debt recovery agencies for meeting compliance standards.

Debt recovery agencies such as Wescot, one of the largest debt recovery agencies in the United Kingdom, have embraced the concept of compliance. The company see the financial outlay associated with complying with more stringent industry regulations as an investment and not a cost. Wescot understand the need to improve relationships with all concerned and restore some form of confidence in the financial services sector. Agents at debt recovery agencies are spending increased amounts of time communicating with individuals, assessing their situations and advising of the options available. Customers are now receiving high quality advice and guidance in relation to repaying the debt owed which has resulted in increased completion rates in relation to repayment plans.

The importance of improving consumer confidence

Wescot Understanding what contributes to sustained economic growth is extremely important in relation to making the correct decisions to bring about such change. Immediately following the credit crunch, and with families throughout the country struggling financially, the Bank of England introduced extremely low interest ways in the hope of cushioning the blow of the tough financial times. The interest rates remained low for a substantial period of time which did indeed improve the financial situations of families throughout the United Kingdom. Following these cuts to interest rates in 2008 it was reported that families had more money to spend after they had paid household bills. Annual discretionary income trackers assess how much disposable income a family has after the deduction of the cost of living. These trackers had shown that following the drastic reduction in interest rates, a typical families disposable income increased from approximately £139 to £165. This increase lasted for roughly two years after the interest rates were lowered and brought a stability to the economy in the United Kingdom.

The improved stability of the market would not last. In 2010, the amount of disposable income that a family had to spend began to steadily decrease. This was due to a number of factors such as increases in the cost of living, rising prices for consumer goods and low levels of wage growth. Despite the cost of living increasing significantly over a five year period, the average household income only increased moderately therefore having a negative impact on a families disposable income levels.

Disposable or discretionary income plays a hugely significant role in the stability and improvement of the economy. It has been concluded that in order to strengthen the economy in the United Kingdom, consumer confidence must be restored. Consumer confidence is vital in terms of the amount of money a family is prepared to spend each and every week. Should a family have a low level of disposable or discretionary income, the confidence of that family to go and spend the money will invariably be low. This results in a sterile market place and problems for businesses and individuals alike as families tighten their purse strings and refuse to spend on items that they deem to be unnecessary.

Debt collection agencies such as Wescot are a good indicator as to how the economy is performing. Recent industry reports suggest that companies such as Wescot have reported that levels of unsecured debt had dropped significantly since 2005 as families attempt to tighten their budget in the wake of the credit crunch.

Wescot Minimise Mis-Tracing through Data Strategies

Dramatic changes in mortgage lending in the UK, such as the loss of 110% of value loans and the reduction in availability of interest only packages has led to an increasing number of people either renting property or living at home or with other family members for longer periods of time. This in turn has created a situation where tracing in the debt collection industry has also changed, with true goneaways becoming harder to spot than ever before. Members of the Credit Service Association are undertaking huge volumes of tracing, with some form of data cleansing occurring at the point of load across some 70% of all wescotnew businesses. When compared to the figure of just 40% as recently as 2007 this shows a significant increase.

Throughout the tracing market, there have originated a number of new products offering smart-data tracing solutions, yet these fall into the category of indicative lead generators and there can be seen a direct correlation between the increase in the use of these and the growing number of mis-traces. As the regulation of credit services and debt collection moves this year to the Financial Conduct Authority from the Office of Fair Trading, mis-tracing will become a key area of focus. Where poor solutions are allowed to enter the product delivery chain, those who hold approved-person positions can now expect to be held accountable. The CSA is now seeking the promotion of higher standards across the industry.

Wescot is the largest debt collecting agency in the UK today, servicing over five million client accounts annually and employing more than 650 staff. The aim of Wescot is to deliver favourable outcomes, creating arrangements between individuals in debt and clients which take circumstances into account and to provide each client with the products which suit their individual needs whilst simultaneously protecting their brand and their image. There are strict compliance standards in place when it comes to the ethical collection of debt, many of which Wescot helped to evolve and implement as market leaders. The compliance standards in place far surpass others in the industry and have been recognised by both Trading Standards and the Lending Standards Board.

Compliance for Complete Consumer Confidence

When talking about businesses in the financial services sector, the term compliance has two meanings. In the first instance, it refers to a company complying with rules which have been imposed by an external organisation, which could be the government or a regulatory body. In the second instance, compliance refers to obeying the rules and sticking to the systems imposed internally which contribute towards compliance with external regulations. The main regulatory body monitoring compliance within the financial services sector changed in April 2014, from the Office of Fair Trading to the Financial Conduct Authority. This brings with it numerous changes in terms of compliance which financial services businesses now have to adapt to.

There are five keywescot functions which are performed by a compliance department – identification, prevention, monitoring/detection, resolution and advisory. A compliance officer will initially identify any risks posed to a business or organisation, then create and implement systems and controls which protect against those identified risks. These controls are then constantly monitored and their effectiveness reported on. A compliance officer is on hand to resolve any difficulties with compliance as and when they arise and to offer advice to the business or organisation on rules and controls. Compliance is vital for complete customer confidence, helping to build up trust and improve client relationships through the consistent delivery of appropriate customer outcomes. Internal compliance systems are usually evolved through conversations with customers alongside adherence to external regulations.

As one of the largest agencies for debt collection in the UK, Wescot is by no means unaware of the changes coming in. In terms of debt recovery, the compliance standards have been evolving for several years now, placing more focus on Treating Customers Fairly. Customers today are often surprised by the approach of Wescot, which places far more emphasis on reaching a mutually beneficial solution to debt rather than demanding pre-determined repayment amounts. As an ethical debt collection agency, Wescot has long been developing standards of compliance which are unsurpassed within the industry, leading the way for others and in some cases actually helping to shape the new government regulations.

Wescot | The Problems with Mis-tracing

Wescot is the UK’s largest debt recovery company. With offices in Glasgow, Hull and Saltcoats, Wescot employs over 650 people to service the 5 million accounts they receive each year. An essential part of the process of closing an account is to actually track down the people who owe money to Wescot’s clients. Committed to delivering a quick turnover with high customer satisfaction, Wescot utilise a dedicated tracing program that relies on accurate data from several credit reference companies. When this information is incorrect or not validated, this slows down Wescot’s operating time and create unnecessary costs to the business.

wescotMis-tracing as it is known, is on the increase, partly to do with the high number of people who cannot afford to purchase a home. House prices are restrictively high in the UK and as a result, many people either live in rented accommodation or stay living with family for longer. As a result, tracing has become a lot harder, tenancies typically last for six months and because the tenant only has to find a new empty property to move into, people can change addresses quickly. While the tracing service that Wescot provides is efficient, the fluid population movement in this country is proving to be a problem.

In order to overcome this large problem, credit reference agencies (CRAs) have to be diligent when it comes to recording information. False information can result in a mis-trace very quickly and this is costly to businesses like Wescot. The Financial Conduct Authority (FCA) is taking those CRAs to task who are mishandling information and as such the process is becoming easier to avoid mis-traces. Good news for Wescot, however the debt recovery company still faces mis-traces that are largely as a result of miscommunication between the CRAs.

If one CRA finds invalid information on their database, this can be removed but up until recently, they were not required to inform the other CRAs. Because Wescot are thorough and believe in the protection of their customers, when tracing they often use multiple sources. However, when the sources are not communicating with each other, this can produce misleading information.

Under the supervision of the FCA mis-trace frequencies are being dealt with, so that in the future, companies like Wescot can move forward unhindered by this nuisance.