Credit, Collections & Insolvency News
The cost-of-living crisis has been ramping up and doesn’t show signs of slowing down anytime soon.
The impact of rising energy costs, increased inflation and benefits cuts is hitting millions of residents across the UK. With more individuals likely to fall behind on their bills, collections operations will need to ramp up activity in order to provide better outcomes.
Why are prices rising so quickly?
As pandemic restrictions are coming to an end here in the UK, many companies experienced higher costs for wages, shipping and energy. This has had a negative effect on consumers as companies have had to increase their prices in line with the increase in operational costs.
In 2021, inflation was at the highest it has been in 30 years, and it is set to reach over 7% in April 2022.
Household essentials are also on the rise, with pasta prices increasing by 15% and margarine prices rising by 37% in the past year.
Currently, electricity bills have risen by 19%, and gas bills are up 28%. Around 18 million households are on standard tariffs and will see an average increase of £693 – from £1,277 to £1,971 per year. And, around 4.5 million prepayment customers will see an average increase of £708 – from £1,309 to £2,017.
The average price of petrol has shot up to an all-time high of 165.37p a litre, an increase of more than 55% in the last two years. Diesel has also risen by a similar proportion to 177.47p per litre, according to figures compiled by the government. As a result, the average tank of fuel now costs almost £90, up by about £33 compared to May 2020.
More recently, wholesale costs have been rising sharply, partly made more extreme by Russia’s war in Ukraine.
Reports suggest a 5p per litre cut in fuel duty is on the cards.
And, the poorest households in the UK could see their cost of living jump by as much as 10% by this autumn if Russia’s invasion of Ukraine leads to a prolonged conflict, a thinktank has warned.
As customer affordability is stretched, organisations are experiencing more complicated debt problems than ever before.
There’s added pressure on collections
Consumer expenditure is projected to increase throughout 2022 compared to previous years, with many individuals likely to fall behind on their payments arrangements. This includes individuals who will never have missed payments before.
Further, the FCA are introducing updated regulations for the financial sector regarding how we protect the wellbeing of our customers- known as Consumer Duty. With the current effect that increased living costs have had on the general public, and the general lack of confidence that many faces from the financial services industry, it is more important than ever that companies demonstrate good practice. A smoother collections process
IE Hub, can help your customers to budget in the here and now, to avoid falling into financial difficulty. They provide organisations with better quality customer affordability data, whilst improving the mental wellbeing of customers. The company are currently working with an array of clients, who are now experiencing a much smoother collections process. Those households on the lower end of the income scale are likely to be hit the hardest by energy costs and inflation rises, which is why they are a proud partner of Vulnerability Registration Service (VRS).
For more information on how IE Hub can support your collections department visit www.iehub.co.uk or click HERE to book a no-obligation demo.
