We know that there’s an intrinsic link between consumers with problem debt and their likelihood of being vulnerable, and Equifax has seen from its own experience and from independent research that where vulnerability is present, debt collection can be more challenging.
Increasingly the topic of vulnerability has become more of an imperative for lenders. But pressure from regulators to do better by consumers in debt is not the only reason creditors are increasingly taking vulnerability more seriously.
Chris Fitch, Vulnerability Lead, Money Advice Trust said “I don’t think there’s a single reason that stands out for why people are increasingly tackling the vulnerability agenda. One of them would be the return on investment, by offering longer breathing space or a different collections and recoveries process, in pounds and pence you get back more. A second strand is just that it’s the right thing to do, it can align with the values of an organisation. And thirdly, it’s often recognising that this is something staff can really engage with, because everyone knows somebody who is vulnerable to some form of detriment.”
But despite the right incentives in place, there is still much more that we can – that we must – do to help vulnerable consumers in debt. That goes for everyone across the industry.
Carlos Osorio, Director of Debt Recovery at TDX Group said “Despite the efforts of the Financial Conduct Authority (FCA) and other industry regulators to get creditors to focus on treating customers fairly (TCF) and fair outcomes, it seems that many creditors undertake debt collection activity without first carrying-out the most basic of checks – despite this data being plentiful and very easily available.”
So what can we do better to help vulnerable people in debt? “It’s about getting the fundamentals absolutely right”, says Chris. In a collections process that means ensuring vulnerability, when it’s recognised, is handled with care and rigour. And that means having people with the right skills and training, and processes that are tailored to encourage supportive interactions and enable the best outcomes.
Data also plays an integral part. As Osorio says “None of us would imagine credit could be obtained without the lender first checking your credit record to assess your ability to be able to pay it back. So why do so few lenders use the same checks when you fall behind on your bills?” Data and analytics must play a vital role in not only identifying vulnerability, but also monitoring it over time. This is crucial because vulnerability is so transient, changing as people’s personal circumstances change.”
Chris Fitch and Carlos Osorio will be talking in more depth about the challenges of debt collection and vulnerability, in particular as we try to navigate a way through the Coronavirus pandemic and its consequences, as part of an online panel session discussion on the 28th July from 2-3pm. They’ll be joined by Rob Mayer, Head of Collections at OvoEnergy; Graham Rankin, CEO at BPO Respect, a debt collection agency with a major drive on vulnerability; and Richard Haymes, Director Consumer Advocacy, Strategy and Market Development at Indesser (ex StepChange, Payplan).
What you can expect to find out about from attending the webinar:
- What more can we do to get things right for consumers, especially the vulnerable
- The importance of culture, recruitment and specialist skills and training
- The role of data in understanding vulnerability, and when to make use of it to optimise your vulnerability strategy
- How customer comms are changing and why
- The role of regulators and how much responsibility creditors should take for treating customers fairly