The latest Equifax webinar debated how the COVID-19 pandemic has brought fair and responsible debt collection into sharp focus, and the challenges of managing financial vulnerability.  

Hosted by Richard Haymes, Director of Consumer Advocacy, Strategy and Market Development at Indesser, the webinar featured expert insights and analysis from across the credit lifecycle. The session was attended by almost 300 professionals from financial and business institutions, and took a deep dive into issues of responsibility, regulation, data analysis, and the opportunities and potential pitfalls ahead.

Haymes set the scene by reflecting on the pre-existing issues of limited financial resilience in a society where 12.8m people hold less than £1,500 in savings, now a bigger issue than ever given the economic fallout from the pandemic. An audience poll found that almost six in ten (59%) attendees expected the number of vulnerable customers and businesses in arrears to increase by at least 50% in the coming months, highlighting the growing importance of responsible debt collection. 

Chris Fitch, Vulnerability Lead at the Money Advice Trust, cautioned many more could face financial difficulties as COVID-19 support schemes draw to an end. Still in a period of uncertainty, he warned collections could ramp up again as the COVID-19 situation eases, creating pressure for indebted consumers, and discussed the challenges of collaborating to set universal collection standards. Fitch urged against getting lost in the maze of vulnerability definitions, and called for creditors to consider all options for customers in arrears, including when to refer them to a specialist organisation for advice.  

Graham Rankin, CEO at BPO Respect, a debt collection agency with a major drive on vulnerability, highlighted the importance of debt agents’ capabilities and improving customer communication. Recognising that training has not kept pace with the escalation of vulnerability, he emphasised the need for higher training standards to handle challenging arrears calls, allowing agents to move away from rigid scripts towards a more flexible and constructive dialogue to deliver more responsible recoveries activity. 

Audience polling identified that only 14% of companies are using a combination of internal, bureau and Open Banking data in the collections lifecycle, and the centrality of data insights was quickly identified as a cornerstone of responsible collection. 

Carlos Osorio, Director of Debt Recovery at TDX Group, made the case for leveraging data to build a picture of affordability across all customers before any action is taken. He called for mandatory use of insights when customers fall into arrears, replicating measures taken when creditors use data for onboarding. While Osorio acknowledged some positive steps taken so far by the industry, he recognised more can be done. He foresees the COVID-19 crisis giving way to a vulnerability crisis, which would necessitate a more empathetic approach by creditors who should avoid a tick box approach to arrears and over-reliance on threatening debt letters and the negative impact this can have on customers.

Concluding the webinar, Rob Mayer, Head of Collections at OvoEnergy, provided the creditor lens. He recognised the role of data with the caveat that building data solutions and strategies is a business investment conversation, but we could now be at turning point within the industry. With between one third and one quarter of UK workers now on some form of government financial support, this could be a springboard to secure this investment and improve responsible collections standards. 

To watch to the webinar please visit: https://www.equifax.co.uk/webinars/responsible-debt-collection-post-coronavirus-and-beyond