Credit, collections & insolvency news
New research by InDebted has found that around 2 in 3 UK adults (64%) who have interacted with existing debt collectors say the experience was stressful’, increasing to about 3 in 4 (74%) among 18-34-year-olds.
The company polled over 2,000 people and found that one in three (34%) who previously or currently have debts say they’ve been contacted by debt collectors. 64% of those who have interacted with debt collectors. Overall, 2 in 5 stated their experience with collectors was negative. Staggeringly, half (49%) who have dealt with debt collection agencies encountered harassment or aggression, with 53% made to feel ashamed to be in debt.
Over half (56%) of respondents who had previously worked with an existing UK debt collection agency said the experience had actually made it more difficult to resolve their debt.
As well as reporting clear issues with treatment from the debt collection agencies, part of the problem is how those in debt are communicated with. 52% of respondents who had currently or previously been in debt said they had been contacted by debt collectors using traditional non-digital methods, including sending letters (24%), making phone calls (20%), and bailiffs visiting their home (8%). In contrast, when asked, digital contact was the preferred option for over half (51%) of customers.
Consumer dissatisfaction with outdated debt collection tactics is increasingly concerning as consumers face growing financial pressures. 38% of Brits surveyed by InDebted are worried about increasing their debts or going into debt in 2022 amid cost-of-living struggles. This comes off the back of recent data from The Bank of England showing an acceleration in consumer spending on credit cards as inflation rises.
Josh Foreman, CEO and Founder of InDebted, said “At a time when the cost of living crisis will see an increase in debts, consumers in need of support are being failed by the broken debt collection model. This is leading to unnecessary stress and poorer outcomes. Customers deserve to be treated with empathy, respect, and most importantly, enabled with convenience and autonomy to manage debt in a way that works for their individual financial position. The antiquated, traditional approach to debt collection has not adapted to changing tides of digitalisation, the global pandemic, and now, the biggest squeeze on consumer finances in generations.”
“At InDebted, we are guided by a digital-first, data-driven solution that puts consumer outcomes at the heart of everything we do. Ultimately, we believe that those in debt deserve better from debt collectors, and InDebted is leading the way for change and progression within the industry. From our experience operating in countries such as Australia, the United States and Canada, we know what a difference we can make to consumers, and we are excited to launch in the UK to support people’s debt-free journey and financial wellbeing.”