Repossessing a vehicle is always the option of last resort. But when all other attempts to rehabilitate an account have failed, this is often the only remaining course of action left for lenders to mitigate their loss.
It is the lender’s legal responsibility to ensure all vehicle and asset repossessions comply with both the Financial Conduct Authority (FCA) legislation and the law, which is why choosing a trusted and complaint business partner is crucial.
Here are some of the key issues lenders should consider when it comes to repossessing assets as part of the collections function.
The first question that needs to be addressed is resourcing. Many lenders operate effective in-house collection teams, which can bring the benefit of greater control and more streamlined operations. However, when it comes to delinquent accounts, case volumes and frequency can vary significantly from one month to the next making it difficult to maximise efficiency as well as schedule and plan workloads.
The balance between in-house and third party resource is a delicate one and dependent on a number of internal and external factors. The unexpected collapse of Carillion at the beginning of this year was a sharp reminder of how lenders can be caught off guard and may need to quickly expand their account collection and repossession resource to protect their assets.
In many cases, a third party provider will be more willing than an employee to “go that extra mile.” It is important to set ambitious but achievable service level agreements with any supplier and positive customer outcomes should be top of the list when it comes to account collections and repossessions.
Let’s face it – this is a small industry and word soon gets around. If you’re looking for a reputable collections agency to handle your repossession work, asking colleagues and industry peers for recommendations is always a great starting point. Once you’ve got a shortlist, do some more homework and start looking at additional factors such as how long they’ve been established, how staff are trained and what types of industry accreditations they have.
- Treating Customers Fairly
The transfer of regulation to the Financial Conduct Authority (FCA) from non-binding guidelines by the Office of Fair Trading was a real game-changer for the credit industry. Whereas price was the primary driver for repossessions, service levels now take precedent.
The person repossessing the vehicle is a representative of your company and must behave appropriately. Do they look smart? Are they aware of the relevant guideline and legislation? How do they deal with vulnerable customers? These are all legitimate concerns that need to be addressed.
Compliance is not simply a list of dos and don’ts, it is a way of operating that must be embedded within a business’s culture. It has to start from the top and cascade throughout the organisation. Don’t just take a company’s word for its commitment to compliance but also ask to see evidence of it in action.
So you’ve appointed a repossession agency and hopefully they’re doing a great job but how do you know? A reputable provider will be able to record and report on every element of a job. The information should be available promptly and in a clear and user-friendly format that is compatible with your existing systems and processes.
- The Bigger Picture
Having too many third-party suppliers can be a logistical and operational headache for any organisation and in the credit industry, where reputation is king, this is even more relevant.
Having different suppliers or teams working on collections, repossessions, haulage and auditing sometimes makes sense but it is not always cost effective and can lead to quality control issues.
Again, this comes down to the right balance between in-house and third-party resource but consider if having one or two trusted partners – who understand your business and its ethos – to take care of all elements of your credit management work makes more sense.
Aston Durrant, Repossession Operations Manager, Anglia UK
Repossession Operations Manager for Anglia UK, Aston Durrant