Credit, Collections & Insolvency News
Credit Connect’s hosted its sixth Online Collections Technology Think Tank 4.1 last week which saw collections strategies and the impact of cost of living economic stresses discussed by thirteen collections professionals from a variety of industry sectors.
The themes of collections risk, customer engagement, affordability and the future of collections were discussed by panelists and Chair Chris Warburton from ROStrategy. The insights from the event were recorded and re-runs can be viewed by clicking on this link.
Over 240 collections professionals from banks, building societies, motor finance, utility firms, local authorities, telecoms, media, debt collection agencies, and fintechs were amongst the viewers across the four sessions.
Commenting on the event host Colin White Founding Director at Credit Connect said “It was great to see such a great mix of collections professionals take part in the industry panel discussions supported by the viewer interactions responding to the survey polls and asking questions at the event.”
“The event had a record number of registered attendees and engagement so I look forward to continuing the conversation at the next virtual collections event in July and at the next face to face version of the event taking place on 23rd November in Manchester planned.”
Chris Warburton, Director and RO Stratgey and Event Chair said “The Collections Technology Think Tank always manages to raise some interesting discussion, and with changes in approach to Digital Collections, Generative Predictive Text and Consumer Duty… 4.1 was no different… some informative discussion and new trends to watch for sure. Thanks to Colin, the Credit Connect team and all the speakers, it was great to be part of this”
Frank Sherlock speaker from CallMiner said “It was a pleasure to speak on the Value of Communications panel at the Credit Connect Technology Think Tank, and be joined by some long standing associates Nick Cherry and Mark Opperman. The panel, which was expertly chaired by Chris Warburton, covered a lot of ground, digital vs human assisted, the role of humans in complex interactions and how automation technology can help with both Customer Experience and Employee Experience.”
“We then moved into the world of analytics and how analysing the interaction data that you already have, at scale, can help with better refinement of customer journeys and drive improved operational performance. The session finished with an interesting discussion on ChatGPT and its readiness for prime time operations. The great thing about these panels is that there are no right or wrong answers, but the audience get a chance to hear from the different perspectives of the speakers about what they are observing . I particularly was struck by how aligned we all were on chat GPT, it has huge potential, but don’t deploy it into production at this stage. Choose your use cases to experiment with it and prove it out, in a test, learn and adapt approach, ensuring there is no customer detriment.”
Kevin Still speaker from DEMSA said ”
“The sessions that preceded our cost-of-living-crisis discussion were helpful in focusing on some of the ‘hot topics’. Chris Warburton kept the rhythm of the debate around the ‘startling’ rise in debt advice demand in January 2023 reported by Jamie Buckley and the challenges faced by consumers around rises in utility costs that Ian Parry is very knowledgeable on, including the best approach to empathetic collections and debt prevention.”
“Amongst this we have the Consumer Duty for FCA regulated firms and their supply chains that has just witnessed a series of sector specific ‘Dear CEO’ letters to focus the mind. A well-attended event with some challenging questions.”
Responses to selected questions:
Nick Cherry, Phillips & Cohen: AI & RPA definitely have a place in credit and collections but I would suggest that organisations tread with care and be sure to test, learn and adapt very carefully as they explore them. Both technologies can offer significant efficiencies of transactional or repetitive processes within our businesses but we need to ensure that the same guardrails and qualitative reviews are built to ensure that there is no unwitting customer detriment or process breakdowns produced. There are many examples of when automation has gone too far and consumer detriment can be material & all organisations need to factor this in as a part of their assessments under Consumer Duty.
Frank Sherlock, CallMiner: Not necessarily, there are providers who service both SME and large enterprises, from the same technology stack. It is all about having use cases that deliver a defined ROI to make the investment pay for itself which is aided by the fact that entry level pricing has certainly dropped in the last few years.
Nick Cherry, Phillips & Cohen: Essentially yes but I think will change over time as the technology and its use cases mature. The ROI will certainly be more material for larger organisations or those with high transaction volumes, but there already are some nimble providers who can make this technology accessible to SME’s without it being cost prohibitive.
Nick Cherry, Phillips & Cohen: Recruiting and retaining quality people has certainly been a major challenge for all global organisations in recent years, but we have not seen the fear of being replaced by technology as a factor in attrition. Technology can help with transactional elements of our processes, but we firmly believe that our skilled & committed people remain the secret sauce of our success and will always have an important place in our business.
Nick Cherry, Phillips & Cohen: It is something which the industry needs to guard against. At PCA, we mandate that a TCF assessment is conducted as a part of our change management process and then continuously monitor and review processes to ensure that there has been no unwitting customer detriment generated. The Board of all organisations need to ensure that they provide the right feedback opportunities to identify failings and the culture to then act quickly to correct them.
Kevin Still, DEMSA: Undertaking income optimisation and benefit checking assessments have become the norm and it is often apparent that many consumers will have undertaken these assessments ahead of discussions with a collector or a debt adviser. Many of the promotions on TV around economising are generic and not really targeted at those with ‘problem debt’. This can be frustrating and discourage those needing professional support from seeking it. As we have seen from recent FCA correspondence to different sectors, distinguishing between superficial and sludge practices is really important. Those that are financially vulnerable need to be able to rapidly access support through preferred channels, where smart phone access is now really popular and can be used in a range of modes, including ‘as a telephone’.
A risk-based approach may be required, especially for cases that are borderline deficit budgets. As this can be stressful, a ‘tell me once’ approach should be encouraged where evidence gathering is made as painless as possible for someone that is genuinely engaging. Data sharing does have an important role to play and we are just scratching the surface of this at the moment in terms of vulnerability and affordability. Many open banking categorisation engines are still focused on those with good credit scores. Similarly, information around credit reports and impacts on credit scores is seldom focused on those with an impaired credit report, where they may already have early arrears, defaults or CCJs. We also stressed the importance of a ‘customer centric’ approach (e.g. Single Customer View). To highlight this, Sheldon Mills made the following statement on 22 March 2023: “The Consumer Duty is a customer-centric regulation. When you are engaging customers in a way that showcases how your product proposition is beneficial to them, it will have an impact on stakeholders and potentially on society at large.”
The February 2023 “Dear CEO” letters generally include an Annex with key pointers around use of open banking, affordability assessments, vulnerability assessments, use of breathing space and spotting illegal money lending activity.
Kevin Still, DEMSA: In line with content of the FCA “Dear CEO” letter to the debt advice sector on 21 February 2023, established regulated debt solutions providers will use a range of data sources, including interviews with the customer (including both parties in a joint debt solution), open banking, credit reports, access to different online data sources (e.g. Council Tax tariffs, HMRC, Land Registry, Vehicle valuations, Vulnerability Registration Service, Zoopla) where assets and other factors need to be verified. All will use the Standard Financial Statement (SFS) in England & Wales. The suitability of Breathing Space assessments will be considered, including whether the breathing space period allows more time to gather data from government agencies, including HMRC and DWP. This can be very important when assessing DRO eligibility. Interviews are important when looking a high and low expenditure items for different household compositions. They are also important in terms of horizon scanning. Flexibility is required in terms of when certain types of information are required rather than desirable (e.g. Property valuation by a third party, detailed asset inventories, inclusion of full partner data). KYC, CDD and AML checks should be aligned to make the customer journey manageable and to avoid them abandoning the journey. Creditors have an important role to play in this when gathering up-to-date balances if these aren’t apparent from credit reports. These may need to be precise for debt solutions with debt thresholds.
Kevin Still, DEMSA: The Standard Financial Statement (SFS) is a consistent basis for starting the dialogue and may be used for ‘snapshotting’ future states if there are known changes in circumstance whether specific to the individual (e.g. retirement) or subject to the economy generally (e.g. Energy tariffs, interest rates changes).
Creditors and debt advisers have different roles to play, but a creditor or debt collector will need to recognise when a ‘holistic view’ is required and they are at risk of providing regulated debt advice where they may be conflicted by their own financial interest and objectives. The debt adviser view will apply the necessary priority/non-priority perspective. This should also take account of tailored forbearance measures available. This is increasingly important with deficit budgets and this requires a joined up approach with key creditors, including energy providers, local councils and government agencies.
Open banking adds another dimension in terms of being able to determine what an individual or household can afford at any moment in time. Whether ‘variable recurring payments’ become more widely adopted in 2023/24 remains to be seen, but this option is certainly available now to maintain a rhythm of payments that can be rapidly restored in the event of ‘short’ or ‘missed’ payments on an agreed time-to-pay arrangement. We are expecting to see more ‘Financial Wellbeing Hubs’ introduced that are designed to allow the consumer to readily engage without needing to speak to an agent unless that is their choice or they have had too many failed arrangements.
Kevin Still, DEMSA: Probably. This works both ways. A number of providers (e.g. IE Hub, PayLink Solutions) are already providing triage type services to determine the extent of someone’s problem debt and then look at options once affordability, vulnerability, income optimisation and social tariff eligibility assessments have been completed. The client can be returned to the partner that referred the case or be re-directed to a debt solution provider like StepChange or PayPlan. Deficit budgets may need thought depending on whether the situation is short-term or likely to prevail for many months. Financial education is a key part of this journey and probably delivered at the appropriate ‘point of pain’, including hand-offs rather than sign-posting to specialist providers. This is all part of measuring customer outcomes under the Duty, where more collaboration will be required around journey analytics and high-level MI. Creditors will want to know the outcome of their referral strategies and debt advice providers the outcome of the recommendations they make where this involves others in the supply chain.
Do you think conversational AI chatbots will revolutionize the collections industry?
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Recordings will also be added soon to Credit Connect’s Youtube channel. An archive of all past digital events can be viewed on Credit Connect’s Youtube channel which can be found here.
