Wescot knows the potential value of combining effective tracing methods with actual customer contact

wescotSome 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.

Wescot demonstrates taking compliance seriously makes good business sense

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 wescotagency’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.

Customer Engagement and Collections Trends in the Debt Recovery Industry

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 altewescotred 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.

Debt Collection Agencies and Effective Customer Interaction

wescotGoneaways 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.

One problem facing the industry is the tendency of many organisations to regard trace activity as a mere exercise in data gathering and not as an investment. This attitude has led several organisations to choose cheap and quick approaches to trace and to miss out on the benefits, to the consumer and organisation, of approaching trace with more care and attention. The necessity of finding solutions that enable ethical and effective customer interaction, in particular with no-contact segments, is becoming increasingly pressing within a culture that is more and more customer-centric. It is estimated that 30-40% of no-contact segment populations are ‘hidden’ goneaways and how to approach this issue remains a major concern within the industry.

Simon Armitage, the head of product development at Wescot, has emphasised the vital importance of customer contact. It is clear that investing in the cost associated with a trace or a contact is critical in many cases, but the industry remains challenged by how organisations within it may demonstrate a good return against such investments made. The value of such investments, Armitage says, is in the results’ visibility alongside the organisation’s consequent capability, which is to consider the results in question and apply the most appropriate treatment. Mis-use of third-party data is unlikely when this approach is taken. It is also the case that correct, ethical treatment is made easier, with appropriate ways of dealing with the situation being clearer in such instances. Older tracing formats are evolving alongside the emergence of new trace products to accommodate this responsible approach. The broader market can significantly benefit, alongside organisations in the sector, from a product that delivers live customer contact and not merely data validation in its basic form.

Wescot appreciates that an effective tracing solution also provides an opportunity for customer re-engagement

Under the regulatory framework ushered in by the Financial Conduct Authority (FCA), never before has it been so important for organisations to ensure that they have an effective and fair tracing system in place. It is no longer the case that a ‘one size fits all’ approach is appropriate when it comes to tracing activity; businesses need to ensure that appropriate treatments are applied to individual cases and that adequate provisions are in place to ensure that third parties are not contacted in error. In particular, there are likely to be significant repercussions for those organisations who repeatedly contact the same third parties in error, both from a compliance point of view and, more widely, in terms of damage to that organisation’s reputation. As Wescot is well aware, it is important to treat actual customers fairly. It is equally as important to try and avoid distress for third parties who may be approached by mistake.

One problem faced by businesses is over how to identify a genuine ‘goneaway’ situation. The new regulatory regime reflects this. The issue is also relevant when it comes to determining whether reasonable attempts have been made to make contact with a customer before any formal action is taken to recover the debt. It is no longer acceptable for an organisation to plough on regardless with formal action and ignore the fact that a customer has failed to respond to letters sent to him and that he has failed to answer telephone calls.

wescotAlso 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.

Wescot knows compliance and treating customers fairly go hand in hand

wescotThe 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.

So far as debt collection agencies are concerned, the regulatory framework can be seen as a way of encouraging firms to treat customers fairly. It is fair to say that the financial services sector as a whole has been the subject of a considerable amount of negative press overage over recent years. The consumer credit niche has certainly not been immune to the cynical outlook shared not just by commentators and members of the public, but also policy makers. Calls for a revised regulatory framework have been strong in the aftermath of the 2008 downturn. It is important to remember however, that the development of best practice standards in the debt recovery industry has been an ongoing evolutionary process for some time.

Certain practices are no longer acceptable. These include inappropriately aggressive letters sent to individual customers. It also includes failure to validate contact data, leading to outside parties being contacted on numerous occasions. Certain companies within this niche have always rejected this type of approach and have adopted the type of practices that provide a very good example to other operators. One such company is the leading UK-based debt collections agency, Wescot. Rather than merely paying lip service to compliance and adherence to guidelines, this particular company has compliance at the heart of everything it does. It uses the latest technology to ensure compliance with all relevant data protection rules. Wescot also believes strongly in treating customers fairly. By engaging with individual customers on a meaningful level, it not only maximises the chances of recovery, but also of the business being able to rehabilitate and maintain its relationship with the individual customer. Rather than seeing compliance as a burden to be endured, it ought to be seen as a tool for increasing the prospects of success.

Wescot knows compliance ought to be seen as an investment rather than a burden

It is fair to say that in the minds of the general public, the image of the financial services sector has suffered over recent years. Instead of merely paying lip service to the issue of compliance, organisations ought to take their responsibilities seriously so that they can be seen to be delivering fair outcomes to customers. This is something all organisations engaged in the consumer credit niche ought to take into account when choosing debt collections solutions. For one thing, failure to take it seriously increases the risk of an organisation falling foul of the tightened regulations that have been introduced under the new compliance framework.

Equally, if an organisation is engaged in the type of unprofessional practices that were all too common in certain quarters of the debt collections world in the past, there are likely to be serious adverse consequences so far as that company’s public image is concerned. Such behaviour included sending out overly aggressive correspondence and telephone calls. It also included poor data validation processes, resulting in third parties being repeatedly contacted in error regarding matters that were not related to them.

wescotA 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.

Wescot knows better than most how the way in which the approaches used by reputable debt collections agencies have evolved over the years. Part of this is down to the fact that ‘compliance’ is not a new concept. Reputable market leaders such as Wescot have been providing a benchmark in terms of fair treatment of customers for some time. In turn, policymakers have introduced specific industry-wide regulations and guidelines that are designed to ensure that all operators within this niche should strive to meet these high standards. The company says that its customers are often surprised by just how customer-centric its approach is. In turn, this means that effective solutions can be worked out. Such solutions are realistic so far as the customer’s circumstances are concerned – as well as meeting the needs of organisations.

Wescot appreciates customer contact is vital for effective tracing

It is sometimes the case that organisations regard tracing activities not so much as an investment but as a simple data gathering exercise that ought to be carried out as quickly and as cheaply as possible. Solutions that some businesses rely on take the form of data cleansing to provide a light-touch indicator of where a customer may be living, in addition to designating all goneaway debt cases as ‘trace and collect’. Such approaches may meet the basic needs of many organisations. As Wescot appreciates however, such an approach, in isolation, can result in missed opportunities for organisations. In particular, they restrict the possibility of being able to re-engage meaningfully with a previously missing customer who has been traced.

wescotBy 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.

There is also an important compliance-related element to this. Since the credit crisis of 2008, commentators, policymakers and the public have turned their gaze on conduct within the financial services sector as a whole – including the practices of those organisations engaged in debt collection. Under the revised regulatory framework, it will no longer be possible to ignore the fact that customers have failed to respond to all correspondence sent or that they have failed to answer telephone calls (especially where it transpires that those numbers are no longer current). Certain practices carried out previously in certain quarters of the consumer credit industry such as overly aggressive correspondence and inappropriate doorstep approaches will obviously fall foul of the regulations. What is more, such behaviour would almost certainly have an adverse impact on the reputation of the organisations involved in it. The leading UK debt collection agency, Wescot is a natural choice for anyone looking for a tracing solution from a company with a proven track record and a commitment to treating customers fairly.

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.

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.