The financial industry has been rocked by the persistent economic instability that took the world by storm in 2008. That economic instability has resulted in a significant loss of consumer confidence with a distrust of products delivered as well as how customers are treated by financial organisations. Once trust is lost, it is extremely difficult to regain.

Enter Compliance

In order to gain, regain, or maintain customer confidence, companies need to actively practice compliance. In a nutshell, compliance is the execution of all areas of business activity from initial customer service to providing effective risk management. The target is to ensure that your company is operating openly and correctly, which entails not only the keeping of the letter of law, but expressing compliance in spirit as well.

Compliance is particularly important for the financial industry, since people tend to be less forgiving when it comes to attacks on their finances. The debt recovery sector requires even greater efforts at compliance in order to garner repayments. Wescot, a UK leader in debt recovery, has personally experienced the rewards of compliance efforts over the past several years. Customers respond in surprise to agent contacts which seek to understand surrounding circumstances and provide repayment solutions based on hardships rather than simply demanding payment on amounts already predetermined by the company.

A Different Perspective

The old way of looking at compliance was through the eyes of cost. Compliance consists of numerous company-wide expenses including additional staffing to implement and monitor activities, the altering of practices and procedures, increases in employee training and the production of adequate business models, as well as complying with regulatory guidelines and paying subsequent fees. Expenses of improving compliance were (and in some cases still are) considered as barriers and thus seen as having a negative impact on company performance.

However, a change in perspective is required in order to see compliance as an investment instead of a necessary cost nuisance. Various benefits are provided by complying with customer and regulatory expectations, both of which work to build and strengthen customer trust. Wescot has found that debt collection customers respond more enthusiastically when they receive positive outcomes to their debt situation, such as agents taking the time to understand their plight and the create payment arrangements that are affordable and help to eliminate the debt in the shortest possible time.

To find out more of how compliance can help your debt collection situation, browse this Wescot short bio.

The process of debt collections has been rapidly transforming, especially over the past half a dozen years, since the financial crisis which triggered the worst blow to world economies since the Great Depression of the 1930s. The stubborn downturn has significantly reduced household incomes in the UK which has, in turn, led to a radical change in how delinquent accounts are handled. Gone are the days of reliance on traditional methods alone. Wescot, one of UK’s top collection agencies, is making much needed adjustments in order to boost success rates, notably in registered accounts pertaining to 3-month break-in delivery. Here’s a look at what’s changing.

Maximising Customer Contact Rates

Maintaining elevated rates in the area of customer contact is vital to collection delivery success. Communicating with customers allows companies to determine the underlying circumstances that lead to sluggish or faulty payments and then to effectively create a plan for repayment that meets the needs of both customer and client.

In order to optimise the rates of customer contacts, data must be constantly updated. Such data cleansing is key for maintaining the most current contact information as well as creating messages that best address individual issues and selecting the most advantageous message delivery options.

Rapid changes within the UK housing market have led to a situation where more and more people are financially obliged to rent or to live with family members for a far longer period of time before being able to purchase property of their own. In the field of debt collection this results in a far higher number of hidden ‘goneaways’, making it harder to spot those who have truly gone away and resulting in an increased number of mis-traces. The response from the tracing market is perhaps unsurprising to produce and develop an abundance of tracing solutions based on intelligent smart-data. However, as time goes on it becomes clear that use of these solutions can be seen as leading to a growing number of occurrences of mis-tracing. Essentially, these tracing solutions are simply indicative lead generators.

While the tracing companies do not as yet form a part of the regulatory scope of the new Financial Services Authority, those organisations which acquire the tracing services do. As such, any approved person who allows poor tracing solutions which result in mis-tracing to enter their product delivery chain can and will be held accountable. Debt recovery services need to adapt quickly to the changes in the regulatory environment, paying due care and attention not only to where data is sourced from but also how it is then validated and used.

There are a variety of reasons why mis-traces occur, including multi-bureaux data matching validation, the use of date of birth matches which result in un-validated addresses entering the database, non-validated new consumer addresses in CRA data submission reporting, failure to back out data which has been incorrectly updated by CRA data sharers after that data has been identified as incorrect and repeat CRA lead data capture.

As an ethical dent collection agency and one of the largest in the UK, Wescot is acutely aware of not only what the changes in the regulatory environment mean but also how the subsequent challenges must be met and overcome. Compliance is a priority at Wescot, which as a company not only leads the way in compliance standards but also in many cases helps to set the new regulations.  Posts from Wescot talk more about how compliance and careful analysis can help to reduce the incidences of mis-traces occurring.

The global recession, banking crisis and steady decline in UK household disposable income has led to dramatic changes for lenders. On top of this, a fast changing regulatory environment has led to a situation where creditors and DCAs have to fast re-think strategies in order to continue to be able to provide products which are both attractive and affordable. The drastically altered compliance landscape creates enough changes itself, yet when combined with the differences in spending and lifestyle which have emerged over the past decade things are looking very different indeed.

Collection rate delivery, which many would expect to slow during the economic crisis, actually improved after an initial decline when compared to the 2006 benchmark on prime unsecured banking portfolios placed with Wescot. This denotes a trend of improvement which may in part be related to an improvement in lending practices which has necessarily occurred due to the banking crisis, yet there are also other factors at play. Figures from 2012 show that initial three month break-in rates have declined yet once stock begins paying, underlying collections performance improves by nearly 20%. This creates a combined upturn of 15% or more.

Break-in rates are a reflection of the level of contact achieved with the customer. Companies like Wescot have been focusing on adjusting strategies in order to increase the amount of customer contact achieved, engaging wherever possible and beginning the necessary dialogue to create an appropriate and affordable payment plan which takes into account individual circumstances. Advances in technology offer increased opportunities for data cleansing to ensure that contact details are accurate and up to date and those previous bad practices in the debt recovery sector such as door-step, excessive dialling, overly aggressive letters and inappropriate tracing activity are not only unused but also unnecessary. Investment across the board in both technological improvements and analytical capability drastically increases the level of customer engagement at an earlier stage of the recovery process, making it easier to find a solution which works for all involved parties.

Wescot operates as an ethical debt collection agency, not only working well within the constrictions of the new regulatory environment but in many cases leading the way in setting compliance standards across the industry. These compliance standards have been officially recognised by both Trading Standards and the Lending Standards Board.

Establishing the residency of a customer in the world of debt recovery has become a significantly different procedure from that of just a few years ago. Not least of the changes has been the move to bring all debt collections firms under the umbrella of a single regulatory body, bringing new regulations with a more customer-centric focus than ever before. Today, ignoring the fact that a customer has failed to respond to all letters, telephone calls and other attempts at conduct is simply unacceptable, but conversely so is repeatedly contacting third parties incorrectly on issues relating to accounts which do not belong to them. In a far more compassionate and customer focused financial services environment, the pressure is on the debt collection agencies to alter strategies and be proactive in re-engaging with customers at an early stage in the recovery process in order to be able to apply appropriate treatments which are devised on a more individual level after discussion with the customer relating to their current financial circumstances.

Wescot is the largest debt recovery agency in the UK, with around five million accounts serviced each year. As a market leading debt collection agency, Wescot takes its responsibilities under the new regulations seriously, not only leading the way for compliance standards, but also in many cases playing a strong role in shaping new regulations. Customers and clients can visit the Wescot YouTube page to find out more. Wescot works to refine and deploy new strategies for customer contact on an ongoing basis, constantly analysing portfolio performance and developing innovative new procedures which encourage early re-engagement in order to be able to apply effective and affordable solutions to each customer account.

Across the industry a combination of the development of new trace products and the evolution of tried and tested formulas is occurring, resulting in more accurate tracing and more opportunities for early re-engagement. Introducing options such as alternatives to fixed-fee type services, pursuing early re-engagement opportunities and recommencing the use of products and services which are trace-led all contribute to creating an environment where the number of ‘goneaways’ can be significantly reduced and each individual customer is provided with the chance to eradicate their debt on terms which suit their circumstances, enabling them to improve their credit rating.