Wescot knows technology ought to be combined with communication skills to deliver best outcomes

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.

wescotUse 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.

Wescot embraces ‘Treating Customers Fairly’ in all its activities

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 wescotcan 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.

Wescot appreciates making actual customer contact is a vital element of effective tracing

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.

wescotWescot 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.

Wescot knows traditional standards of professionalism are still vital if companies wish to reduce mis-trace scenarios

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.

wescotBefore 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.

Wescot understands the changes in the collections niche that have occurred in recent years

Since 2008, a number of important factors have posed challenges for creditors and debt collection agencies. For one thing, there is of course the broad economic picture to consider. The last five years have seen the most significant and prolonged economic downturn since the 1930s. On the one hand, this means that many consumers have struggled with decreased levels of disposable income over recent years. At the same time, concerns about the financial services sector as a whole has led to tighter regulation and a greater emphasis on compliance.

Against this backdrop, it may be natural to assume that recovery rates would have decreased over the last five years. From the point of view of one of the leading UK debt collection agencies, Wescot, this has not in fact been the case. While there was an initial decline in the immediate aftermath of the unsecured portfolios collapse of 2008, recovery activity for this particular company actually improved markedly (when compared to a fixed 2006 benchmark).

wescotBy 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.

So far as Wescot is concerned, such practices are unfair, ineffective and very often counterproductive in terms of reaching a satisfactory outcome for all parties concerned. For one thing, this type of behaviour runs contrary to the current compliance regime. Equally as important, this type of approach eliminates the possibility of a meaningful relationship being rebuilt between the organisation and its customer. It also significantly undermines the ability of the collections agent to engage in a meaningful way with the customer and to bring about a satisfactory resolution to the situation.

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.

Brief Market Outlook for the Credit Industry

To accurately assess the outlook for the credit industry, in particular the debt recovery market, it is essential to look at the sector from two perspectives. Both market compwescotetition and the global economy are primary factors in how debt recovery is going to proceed in the future. Not only does the UK’s economy as a whole play a big part in the performance of a debt agency, but so too does the performance of that company’s competitors.

The market as a whole is worth approximately £500 million, a figure that has not changed significantly since 2007, despite what was occurring throughout the financial world since that year. Competition is rife in the debt recovery industry, not only do large financial institutions and high street banks have their own departments that handle debt recovery, but the market is split between a few big name companies such as Wescot and many more companies that own a small percentage of the market share. One reason as to why there are so many debt recovery companies is that if collection rates are high and the business is efficient, there is more opportunity for a variety of aspects. Greater competition for example, has forced companies to present clients with greater price comparisons.

Looking more broadly, debt recovery companies have had to overcome a tumultuous economy, which has put pressure on their operations. Prior to 2007, there were a large number of personal loans being issued which naturally means a higher frequency of defaults; a stronger economy also provided customers with the means to eventually repay these debts. After the credit crunch however, consumers have been slow to borrow money and with more economic pressure on the individual, those who have defaulted are struggling to return their debt. This means that the industry as a whole has had to drastically change their strategies to remain abreast of the new difficulties.

For companies like Wescot, the outlook for the industry still remains positive. The fact that the market’s worth as a whole has not changed in seven years despite the banking crisis is testament to this. The debt recovery industry’s capability to adapt their methods quickly has ensured its security for the time being.

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.