In Focus Collections
But, if you have a good methodology on the data and a strong handle on the selection process of the people that you will put through a litigation process – and that includes the LBA stage – then you have data that shows that litigation is likely to be successful. Most people now will have taken any language mentioning litigation out from their collections processes entirely, if they do not intend to do that, so this could be the first time that someone receives an LBA in that journey and it carries a certain strong message. As long as you have robust pre- legal procedures, you have every chance of engaging with that person.
MS: There is clearly the regulatory aspect to make sure that the right people are properly targeted for litigation. So, if you are using litigation scorecards, it is looking at bureau data and a number of factors. If your process then looks at giving vulnerable customers, who might have slipped through the net, the opportunity to engage with you, then that is best practice. But we always need to remember that there are some people who are not engaging with you, not because they are vulnerable, but because they are trying to ignore the debt.
RW: It is different between the worlds of secured and unsecured from a perspective of whether to proceed or not. There are different dynamics in place and different regulatory considerations.
CO: I suspect many creditors becoming wary of litigation (and indeed field work) was an intended consequence of the regulator wanting the industry to stop using general threats and to be more discriminatory about when it is, or is not, appropriate. It was inevitable that a lot of people initially
It was inevitable that a lot of people initially withdrew, but it is no surprise to see activity increasing again as people get more comfortable
withdrew, but it is no surprise to see activity increasing again as people get more comfortable about when and how it is used.
MS: If you write to 100 people with an LBA and the result is that you are only able to sue one person, then there was obviously no intended consequence and this is clearly unacceptable and completely against the regulations. But if you are scoring things and decide that, unless there is a very good reason and the customer engages and explains that there is a reason why the situation has arisen, then we think that litigation is appropriate, and absolutely not anti-TCF. It is often the perception that litigation causes a lot of complaints when, in fact, it causes very few. In percentage terms it causes one of the lowest number of complaints of all collections processes; it is the court that decides and the customer has every opportunity to engage throughout the process.
RB:We feed a lot of information to our collectors through their training and all customer detail is available to them on our platform. The collectors’ aim is to get as much information as they can about the reasons for the ‘can’t pays’ and the ‘won’t pays’. This is then added into our historical data and scorecards are built and used to
decide whether our customer is a ‘man of straw’ or not, and if they are a worthwhile proposition to litigate. A refresh of our underwriting procedure can be done at any given time of default – we will look at that and score from there. At that point, and, if positive, then litigation certainly does have value to it in order to concentrate the focus of the collection.
JP:We do not litigate at the moment, but when we have sold debt, the companies that we have sold to have done so, and without any adverse publicity. The fear for us is whether we can get things right, but it would be worth a trial.
Pre-action protocols – will these impact upon your collections and litigation policy? FH: I think that it will impact, purely from a logistics point of view in terms of the number of pieces of paper that will be required. If you print both sides, then we can maybe get it down to five or six pieces of paper to fit in an envelope, and that is with a one-page LBA that covers all the pre-action protocols within there. I think that we can expect more requests for agreements, which is something that we already do, but can expect more of it.
MS: It has been a while coming and everyone has been very aware of it and concerned about what it could mean and what it could look like. The various lobbyists, who lobby on behalf of interested parties, have got it down to something workable and we have been aware that you need to provide the right level of documentation. So most clients, that we engage with, are well aware of what they need to do, and have been doing it for some time now. CCR
Left-right: Steve Dukes; Gary Jones; Russell Barrett; Stuart Knock; Scott Stevenson July 2017
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