Credit & Collections Technology Think Tank review

• How would you ensure that emphasis / priority isn’t given to dealing with the new to fin diff as that is potentially an ‘easier’ solution?

SB: Firms often report at a macro level.  More focus on the outliers within cohorts may support identification of the most severely impacted customers.

DB: I would always encourage champion / challenger approaches to be taken.  Whilst the new to financial difficulty may be an easier solution we use a scorecard to assess likelihood to cure, so that we can target collections activity where it is most valuable.

• Do you agree that there is a danger of credit assessments not being fully reflective of a customer’s circumstances where BNPL is not recorded on credit files?

SB: Yes and equally where BNPL providers are using credit file data but not contributing there is a continued lack of reciprocity – appreciate plans are in place to resolve this.

• The pandemic drove rapid change. Will the cost-of-living crisis do the same?

SB: In the short-term possibly not.  The pandemic hit all sectors of society at the same time whereas this crisis does not.  Until significant impacts are felt “higher up” then it may be challenging to communicate the sense of urgency.

• Do the panel think the industry is prepared for the increase in breathing space notifications coming in on their accounts – whether current, collections or sold

SB:As this is a largely automated process, the operational challenge for an increase isn’t significant.  However, planning and forecasting, and tracking of resulting customer outcomes would be impacted by increase in volumes.  The advice sector, as the main “feed” into firms for breathing space requests, is more likely to feel the impact of any increase.  It is questionable whether there will be an increase or not: many firms are reporting low volumes of breathing space customers who are able to maintain their obligations during the period, which is likely to increase further due to cost of living challenges.  Therefore it may be that fewer customers are eligible in the first place, and instead transition to a different, more suitable solution.

• Is the role of a collector more complex with the current challenges?

SB: The concept of tailored support, the cost of living crisis, remote working and post pandemic physical and mental illnesses are inevitably leading to collectors being asked to do more.  We could do more to promote collector as a viable and valuable career option recognising new complexities.  We could do more as an industry to recognise the value these colleagues and this sector adds.

• What learnings have the panel taken from FOS decisions on affordability and responsible lending when building assessment models?

SB: Care has to be taken to balance learning from each decision with a proportionate response, particularly for firms with a low volume of complaints going to FOS.  There are clearly wider learnings that can be taken from published FOS cases generally which may be more useful than focussing solely on cases relating to that specific firm.

• What do the panel think their organisations should be doing for those that are most vulnerable – those in budget deficit and small businesses in particular?

SB: Make it easy to contact firms across multiple channels.  Look carefully at the tone of communications and consider specific statements of intent re: those cohorts, e.g. “if you tell us you spend more than you earn, we will XXXX”