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You don’t have to be involved in collections to be aware that the last 18 months have affected the financial circumstances of a huge number of people.
Now we’re looking at a hopeful return to near normal, what does that mean for businesses looking to recoup monies owed? We brought together collections experts to discuss this at a recent roundtable.
It must be over 15 years ago when I first heard debt collection agents talking about what they found when they ‘knocked on a debtor’s door’ – albeit often over the telephone. Back then, the focus was very much on the money – and getting to it before another creditor did. But, although they’re the last line of the collections process, debt collectors often found themselves on the front line of seeing what was really going on. So began our fledging understanding of what we know today as ‘vulnerability’ and of what causes people to fall behind with their payments.
In our recent roundtable – which brought together customer service collections specialists from across a number of different sectors - we agreed that, up until early 2020, many of us felt quite comfortable with our forbearance options for struggling customers. Then Covid-19 arrived and customers whose finances were already stretched, crashed almost immediately. National support initiatives have been helping to plug the gap, but all things must end. And, as we return to our forbearance processes and tailored support packages, it’s timely to consider how collections teams can prepare for the inevitable wave.
There’s a growing sense that the customers who will need help later this year are going to be different to the customers who came forward earlier. Perhaps people who may have managed previously by being prudent, cutting back, using savings, selling assets or receiving government support (either personal or for their business). But, as one of our panellists explained: “With CBIL, BBILS and furlough disappearing, there’s a lot of people now who will need longer than three months or six months support so we’re expecting there to be a bow-wave towards the end of this year and into next year.”
In addition to those seeking help with debt for the first time, there will be those customers who have had support but who are now unlikely to be able to afford even vastly reduced payments. One collections expert in utilities posed the question of how long we can support those people before we start making matters worse, highlighting the particular challenge around whether the forbearance approaches we’ve used in the past will continue to be appropriate.
“The customers that companies are dealing with today are completely different to, say, a couple of years ago,” said another credit specialist. “They’re in financial difficulties for different reasons and the prescriptive forbearance the regulator put in place last year will have unintended and negative consequences for customers today.” So how can the collections teams of the future balance the need to support customers with operational and commercial aims? We agreed there are five positive measures we can take:
1. Make it easy for people to approach you
For those who haven’t previously asked for help, taking that step is likely to be one of the hardest things they’ll ever do, because to them everyone else is getting ‘back to normal’ whereas they haven’t been able to ‘make it’ (whether that’s true or not). It’s for this reason that collections departments should be providing as many ways as possible for a customer to get in touch - the more routes we offer, and the more effort we put into creating an environment where customers feel they can raise their hand for help, the greater chance there is of a customer using one of them at the all-important early stage.
2. Ensure you’re providing the highest quality, personalised support
It was agreed that we should take the opportunity to reassure those customers who do get in touch. Many of them will fear the worst outcome – that their car or laptop will be repossessed, or even that the bailiffs will visit. That’s obviously not the starting point, but many customers don’t know this because they’ve not had to think about it before. There’s also a chance to support people who can see they are going to be in trouble financially but who haven’t triggered any of the usual collections activity responses because they haven’t yet fallen behind with their payments.
Richard Wade of Capita’s remediation services touched on this need to recognise diverse and changing customer circumstances and how the right people are crucial to this: “At Capita, we’re leading with customer services for a major high street bank and have focused on recruitment in the last 18 months to build three different layers of experience and capability within our collections team. We then introduced segmentation so that when a call comes through the customer is matched to the right agent to achieve the most positive outcome.”
There’s likely to be some element of retraining for staff to respond to an as-yet-unknown toolkit but the outlook is positive as Richard explains: “Colleagues recruited over the last 2 years will have been trained with the ‘furlough/payment holiday’ toolkit front and centre but, although this approach of generous forbearance is likely to shift, the modern collections agent has strong customer service skills, with an excellent aptitude for identifying and supporting vulnerable customers, and we believe we’re positioned as well as we can be to deal with what the next 12 months may bring.”
3. Consider the most appropriate arrangements for each customer
One lender spoke about the importance of an informed, personalised approach and how they’ve been data-gathering as much as possible to understand where lockdowns are happening, and when – and how - they’re easing. This approach has paid off: “Many of our customers are in the hospitality trade, so we’ve been using our insight to get to know them and better understand their business challenges so that we can work with them to overcome these, or at least manage them. We’re in this together and customers recognise the efforts we’re making to support them through this.”
We agreed that one of the current difficulties is in providing individualised support packages which strike the right balance between helping people to get back on track, and not delaying the inevitable. One of our car finance specialists highlighted the growing sense that, over the next 6-12 months, we’ll be having more, and very difficult conversations, with customers who have been struggling for a long time, where the right course of action now is to return the asset.
4. Think outside of the box in terms of next steps
Support doesn’t just have to be about putting a payment arrangement in place for a customer. Of course we should be recommending to people to seek good debt advice – particularly when they owe money to more than one business – but there’s more we can do to help customers to break the cycle. Rather than continuously rolling over payment arrangements for a customer who has lost their job after 25 years at the same firm, we could put them in touch with people who advise on CV writing and interview techniques, point them in the direction of benefits they’re entitled to and organisations who provide work clothes.
In utilities they’re already taking this alternative approach: “We’re trying to be more innovative in our thinking around support. What can we do that can make the difference? Can we give customers access to better tariffs, energy advice or more energy efficient white goods to help break the cycle?”
5. Look after the people who are looking after your customers
Of course, none of this can happen without the support of collections colleagues on the frontline. We need to be aware of what we’re asking of them to do, and the impact of this. As one panellist emphasised: “We must be mindful that our teams are dealing with an onslaught of customers, and that this takes its toll. We’re starting to see the signs of emotional exhaustion.”
It’s not just about recruiting the right people with the right skills, we need to minimise those impacts through proper, flexible resourcing, ensuring that our colleagues remain fit, healthy, and able to continue to serve customers during uncertain periods. Let’s not forget that it will continue to be difficult times for them too: with concern over increasing numbers of isolating colleagues, it could cause significant problems for our workforce unless we have strong contingency plans in place. Richard mentioned that at Capita they’re modelling even more agility in their ability to move from office to home and back again, and how they’re supporting colleagues in a world of increasingly complex customer calls, planning for different scenarios that may impact teams to ensure support is available for customers when they need it most.
In the roundtable we discussed many of the challenges and opportunities, but much is still unknown – what will tomorrow’s toolkit look like? What support needs will our customers have, and how can we make sure that our approach to forbearance will work for today’s customer? Now is the ideal time to consider your collections response: no-one can expect the next 12 months to be easy but the way we respond to our customers will shape the way they, and the population, will think of us, for many years to come.
Director, Different Petal Consulting Limited
Caroline is an award-winning Customer Insight professional with over 25 years of experience across different regulated markets. She has a deep-rooted and practical knowledge of consumer vulnerability, dispute resolution, customer experience, diversity legislation and stakeholder engagement.