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Facing Change: The challenges facing debt management organisations

Published Date: 7th May 2020

In the latest Facing Change video, we interviewed Steven Coppard, Deputy Director of Government Debt Management Function at the Cabinet Office, to share insights on the impact of COVID-19 on the debt sector across the UK.

Coppard highlights key challenges faced by debt management organisations during this pandemic, particularly the speed at which organisations have responded to establish social distancing measures and particularly, to uphold the core principle of Treating Customers Fairly during these unprecedented times. Interest freezes and charge and payment holidays are just a few of the strategies being deployed across the debt management industry to help individuals. Across the UK, doorstep operations have ceased, with large volumes of staff simply unable to undertake their work, being furloughed. Again, some enforcement agencies have adapted in admirable ways, finding means to support their communities by using their vans to deliver shopping to vulnerable people.

Coppard references a recent YouGov poll that revealed almost twice as many people feel comfortable talking about their mental health, as will talk about debt. This highlights the requirement for organisations to take a proactive approach to enabling conversations about debt with individuals. A typical problem faced by many organisations in this scenario is how to reach out to consumers when the address, phone or email information they hold about them is out of date, or wrong, highlighting the need for regular and thorough data cleansing processes.

Steve explains that the exit strategy from COVID-19 is key to ensure that individuals in debt are not further impacted by a return to ‘normal’ in the collections industry. He stresses that collections organisations should already align to the FCAs guidelines on Treating Customers Fairly, but that these should be even more front of mind as we emerge from this pandemic.  Along with signposting to free debt advice, affordability and vulnerability assessments will be key to helping organisations understand the individuals they are dealing with. For these, access to insolvency and CCJ information or current and past directorships – where for example someone has lost their business due to the crisis – will all be essential in determining ability to pay and the degree to which an individual may be vulnerable.

Success here requires organisations to understand and recognise the challenges within their own data, too. A Single Customer View of an individual can be hugely valuable in the affordability assessment process. Many organisations struggle to gather all relevant information about an individual from various product lines and business areas that can operate independently of one another, ultimately proving detrimental to the outcome for the individual. Being able to link all the various accounts or debts an individual has with an organisation makes for a far better and fairer experience for the individual, whilst delivering a more cost-effective collection strategy for the organisation.

Alongside a concerted effort to open up communication with an individual through newly-acquired phone numbers or email addresses, organisations should find they are in a good position to support individuals in debt whilst maintaining the collections activity and success levels.

The key message from Steve Coppard here is that, now more than ever, the industry must focus on resolution rather than collection, and by doing so move the conversation from getting debt out of people, to getting people out of debt.

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