In Focus Collections
Left-right: Mark Bryant; Peter Munro; Richard Wilson; Raj Gill; Matt Subert >>
company for three years, we are going through change and upgrade
in technology, developing tools for the job. There are so many good credit solutions out there, which I have used in previous roles to automate statements and dunning letters, which opens up lines of communications with the client.
RW: For me, it is a question of how you can develop an infrastructure for your customers through which they can contact you for payment all year round. We have seen, through the suppliers that we have, that the teams who have the technology in place, such as IVR and self-service, see much better payment performance on month ends that fall on a weekend or bank holiday. This is due to the optionality provided to the customer. We need to allow customers the ability to pay through their smartphones and tablets, to enable customers to have as many avenues as possible to engage. With the best will in the world, some people who drop into arrears do not want to talk to a lender – and, indeed, do not need to as many correct the issue quickly – they have fallen into arrears for their own reason and now they just want to pay the arrears off and get on with it, without always needing to engage with a collector on the telephone.
Is litigation commercially sensible in 2017 and, if so, at what cut offs? SK: Yes, I think it is commercially sensible, you need to think about the data that you have on the customers that you are going to select for this treatment. We ran a trial, last year, for a utility company that pre-selected the customers they felt would be the very best for litigation, and, when we started doing some checks and background work,
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we found out that they had sued some of these customers on multiple occasions. This would be yet another year that they would be sued when they had not settled any of the previous judgments. So data is crucial: if you get the data right, then litigation is certainly viable, if you are not sure, I would not suggest that litigation is used as a punitive measure.
MM: I think you need to be clear that you are doing things for the right reasons, it must not be punitive. You are going to increase a customer’s indebtedness by going through this process, so there has to be a clear method of enforcement. You cannot just go for a CCJ and think that customer will automatically pay.
MS: Litigation has always been a subject that has split the room pretty evenly; half of the people will say that it absolutely does work, and half will say absolutely not, and both parties will have data to support both opinions. Some people have tried it and spent a lot of money, and others have tried it and it has been very successful. It needs to be used in very specific and selective circumstances. When I first joined the industry, 25 years ago, and I spent time at the CCUA, a lot of litigators would talk about the ‘cost for pound collected’ and it
was invariably north of £1 to collect £1! I could never understand why you would spend more than £1 to collect £1, and they would, invariably, look at me and decide that I was clearly not getting it! But it is about the collections process, and there should never be a drive for litigation for litigation’s sake. If it is the right solution, it has to be a question of if this is the right economic solution with a clear idea of the enforcement route? I think that, in the past, solicitors have probably been guilty of not being as concerned as their clients with the collections results of legal action. So they would say ‘give us those 50,000 customers and we will sue them all’, but, for many, that is not the right solution because it is not TCF and there might be vulnerable customers in there.
PM:When I used to work for a lender, a letter before action (LBA) was one of our best triggers for engagement; it would always drive a significant number of customers to call us to reach a resolution. So is that still the case: is it commercially viable as an engagement tool and then, if that fails, a further decision around the commerciality of next action needs to be made?
MS: I would say that LBAs have, quiet rightly, fallen from favour because the regulator has looked at it and decided that to send an LBA with no intent to litigate is not an acceptable practice.
We need to allow customers the ability to pay through their smartphones and tablets, to enable customers to have as many avenues as possible to engage
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FH: It comes back to the point on data: why would you sue somebody who has been sued three years in a row? You should never do that, you should know that is the case from your data and be aware that it will never be commercially viable to do so.
July 2017
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