ANALYSIS CCR
ACHIEVING FULL PRINCIPAL STATUS FROM THE FCA
Showing a robust business model is key to receiving full authorisation, and approval to act as principal By Stuart Knock
WHEN we announced in mid June that EOS had received full authorisation from the Financial Conduct Authority (FCA) it was one of the first of what will surely become a steadily increasing stream of public announcements from firms in the debt collection sector to state that they have attained the regulator’s approval. But dig a little deeper and the detail
reveals that our authorisation also covers an approval to act as principal to ‘appointed representatives’ who are working in the field. In fact, if some of our peers ever venture into this space in the future, the ‘multi principal appointed representative’ structure – as defined by the FCA – could be utilised by EOS to allow the appointed representatives to work on regulated debt for more than one principal. Perhaps the two most interesting
questions that can be posed are: why did more debt collection agencies not decide to apply for principal status? And what did we say to the regulator to provide comfort in regards to the quality of their field operation? Applying to the FCA to act as principal
was one of four possible strategies that a debt collection agency, utilising self-employed field agents, could adopt when applying for full authorisation. The alternatives were to withdraw from field operations and outsource; to employ the field agents and to move them onto the payroll; or, if remaining self-employed, to insist that they only work on regulated debt for one firm. Now that the application periods are
over, industry observers can see that what might have been considered the ‘safe bet’ – that most firms would apply to act as principal – has not materialised and that the salaried and ‘captive’ self- employed models have been far more prevalent.
40 In fact, so few have applied for
principal status that the multi-principal rules laid out by the FCA might now not have the policing effect that was intended for the self-employed agents who work for more than one firm. So what did we do to provide clarity and reassurance to the FCA that the
The deployment of Dator allows us
to schedule a real-time call to the customer on the contact number that they have just given to our agent. The agent is then free to move on
to their next visit whilst we speak to the customer, and one of the first priorities is to check with the customer
Our aim was to dispel any concerns that the regulator might have that using self-employed agents would produce inferior outcomes for the customer
business model was robust enough to protect customer interests? We were very fortunate in that our
new mobile field app, Dator, had just completed development and was being actively deployed on a couple of utility clients’ portfolios. We used the data from these trials to form the nucleus of our business case to the FCA. The field agents had already been
re-skilled away from any areas that caused us compliance risk or audit visibility issues at the door. All sensitive one-to-one customer interaction was now being handled over the telephone on recorded calls, freeing our agents up to focus on driving contact, not on self-evidencing adherence to compliance standards. Our aim was to dispel any concerns
that the regulator might have that using self-employed agents would produce inferior outcomes for the customer. We did not believe that using fully
employed agents would guarantee any better outcome for the customer; it was the process and the control of it that would assure a quality result for the customer and, very importantly, a high degree of visibility of those results.
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that the agent was polite and explained the purpose of the visit and call adequately. Taking customer feedback in real time
(less than two minutes from first contact with the agent) is a crucial first step in gaining trust with the customer. We can then conduct a fully auditable conversation with the customer, about their circumstances, their intentions and the affordability of any plan agreed. Only with head-office approval will a cash-collection plan be set up to ensure that the customer is getting a solution that is right for them, and not for the agent. The industry will be interested to
see how the use of field visits evolves under the guidance of the FCA and what, if any, steps are taken by the FCA to gain better transparency and quality control of field visits for debt collection purposes. CCR
Stuart Knock is chief ececutive of EOS
Stuart.Knock@
EOS-Solutions.uk.com
July 2015
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