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In Focus Collections


A glimpse into the future of a changing industry


What will 2016 bring for the collections and debt purchase industry, and how can professionals react to events?


Najib Nathoo Regional director West Europe, Hoist Finance najib.nathoo@ hoistfinance.com


The last 12 months have been busy for our industry, as consolidation and the advent of a new regulatory regime have served to change the collections and debt-purchase landscape irrevocably. So what can we expect in 2016? Will we see more of the same? Or are we, perhaps, part way through a period of transition from the ‘old’ to a ‘new’ way of thinking? Certainly the UK economy is still in a


state of flux. While the swingeing highs and lows may now be behind us, that does not mean that there may not be some turbulence ahead, both domestically and further afield. The Financial Policy Committee of the


Bank of England only recently warned that the buy-to-let boom could pose a serious risk to the UK economy and landlords, usually funded through interest-only loans, could be disproportionately vulnerable to large falls in house prices. There are other risks too from those


who may have over-reached themselves financially, and are therefore vulnerable to even modest shifts in our economic position.


A changing market Certainly, the debt sale and purchase market will continue to dynamically shift. We know there will be further portfolios for sale both from existing sellers and those who are selling for the first time. There will be a good level of outsourced outflows and competition will no doubt be tough. The shifting UK landscape may oblige


ever more of those larger operators to look outside of the UK and into Europe for their future wellbeing, something which is already happening to some degree and


February 2016


New regulation, and new standards, should not restrict innovation; the opposite should in fact be the case


to up their own game, and accelerated new ways of thinking and operating. I expect the same may happen within debt purchase. Competition is a good thing. Businesses that believe that they will


which has been central to our own strategy for the last three years. We are also seeing a number of agencies


and buyers re-examining their operating models, and potentially driving further innovation. Consolidation, which has been a major


theme for the last two years, is undoubtedly slowing. One could say it is simply a matter of there being fewer companies to buy that have not already been bought! But consolidation has also helped drive


innovation, and enabled smaller, specialist operators to emerge from the shadows with niche services that prove that, while scale can be important, you do not always have to be big to be beautiful.


The future for banking For this we can take as our cue the banking sector: while banking is dominated by a small number of large, well-known players, this has not stifled or discouraged the development of challenger banks. And those challenger banks have, in turn, prompted and encouraged the larger players


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succeed by simply doing more of the same – ‘business as usual’ – may find themselves at a disadvantage. They need to learn lessons from the ‘challengers’. They need not only to look at the changes being introduced by the Financial Conduct Authority, but also the developments in other related industries (such as lending and within the advice sector) and how they impact our industry going forward. New regulation, and new standards, should not restrict innovation; the opposite should in fact be the case. How success will be measured is also


changing both internally, among employees, and externally by clients. Reward and remuneration, a key topic in 2015, will continue to be an area of discussion, debate and development in 2016, as the industry seeks solutions that are appropriate to customers and clients alike, and that recognise successful ‘outcomes’ as the only correct measure and moving away from how much money is collected.


Conclusion Our industry has changed significantly over the last five years and will look significantly different five years from now. To create a sustainable business will


require operators to focus on the detail; those who can adapt to change, and adopt new ways of thinking, will be the ones who win out in the end. CCR


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