…and what the collections sector needs to do

As we know, the link between debt and mental health is significant. The recently published vulnerability guide for debt collection cited that one in two consumers with a debt problem also has a mental health problem. As members of the credit industry, we are already engaging with this agenda and the people affected, so we should be using every tool available to us to address the problem.

Technology is a key driver here and the reason that this year’s Credit Services Association’s UK Credit & Collections Conference (UKCCC) in September 2017 has a strong tech focus.

The fintech community is doing some excellent work to find solutions for lenders such as designing tools that will allow customers to self-diagnose mental health problems and better control their finances at times of difficulty. Last week, the Money & Mental Health Policy Institute (MMHPI) published its ‘Fintech for Good’ report looking at how financial technology can support people experiencing mental health problems. They will be delivering a session on this and their wider policy work at UKCCC.

But how realistic are some of these fintech solutions? And what about those (probably the most vulnerable) that ‘fall through the gaps’? And how far off are these tools from becoming a reality across banking/lending? As the MMHPI Fintech for Good report states: “There’s no guarantee that fintech will develop in a direction that supports mental health. Without careful consideration it could be discriminatory, disempowering, stigmatising or reinforce the digital divide. These risks are real, but should not prevent progress. Instead, they should frame our thinking, guiding us to develop tools and processes which are fair, safe and level the playing field.”

The MMHPI report identifies five ways fintech can help:

  1. Money management
  2. High-control products and self-exclusion
  3. Checking understanding online
  4. Support from friends and family members
  5. Spotting the problem early

We want to take this a step further to look at how we can do similar things in the collections space to ensure that those with mental health issues who still end up in financial difficulty are properly supported at that point in the process. Are there existing data solutions which we could be using now? For example, propensity to pay scores provide an insight into who is likely to pay and debt collection agencies/debt buyers tend to focus on the highest likelihood of payment. How much analysis and focus has been given to those with the worst scores getting a more appropriate treatment vs just going through a ‘tick box’ process? Will the use of different channels open up new opportunities to engage with these customers and how do collections organisations achieve an ROI thereon?

These amongst many other questions need to be considered, debated and acted upon and we hope that UKCCC 2017 will be a platform for starting those discussions.

Nick Cherry, Chief Operating Officer, Phillips & Cohen Associates and Vice President of the CSA.