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In Focus Consumer Credit

Left-right: Chris Hague; Bruce Curry; Connie Smith; Howe Timms; Emma Ryan

How are regulation and IFRS9 continuing to change your customer strategy? HT: The problem of stage two and forbearance is real and I agree that you cannot let that affect your customer journeys, but if you are more sophisticated, the nuance will be ‘can we improve forbearance and have more accelerated cure rates’ and there will be more debt sale for high-risk customers. I do not think that people will properly get on top of this until they get to the dry-run and then they will have some surprises.

RC: I think one of the biggest risks is the opportunity for CFOs to use the data to game the system by managing the P&L, moving money around. They can do it relatively easily and then you have a set of data about how you are treating and provisioning loans, but you have to ensure that translates into how you are managing the customer and ensuring that you treat them fairly and appropriately.

DM: Certainly, over the past year or 18 months, the hysteria has calmed. Previously, our own clients, and those across the industry, were unsure of where things were going to go and what was going to happen. Over the past few months, as the licences have started to come through, the realisation of where everyone fitted in to that particular piece has taken away a lot of that hysteria. We are pretty much back to having conversations with clients about the relationships we can build and things that we can do going forward to enhance the customer experience, such as using digital collections to encompass a lot of the strategy.


There is a lot more positive discussion, from a DCA perspective.

BC: If you take what happened in the US, they had their so-called hysteria and now it is said the CFPB have got to a point where they are actually starting to back-track, or at least soften, on some of the things they put in place, and likewise the TCPF, who do all of their contact regulation. They are starting to ease up on some of the regulation. Whereas you have other places like Turkey, who turned the credit-card minimum payment to above 30% overnight and so, basically, turned their entire credit- card industry into a payday loan. It is no wonder people flocked into collections! The regulator wants to be confident that the regulatory requirements it bestows on the industry can be supported through the analytics and technology available to the institutions in the industry.

In some cases, it maybe be considered over ambitious and in others maybe under ambitious. The FCA is right to be less about knee-jerk hysteria and more about

appropriate balance of expectations as to how manageable regulatory adherence is.

DC: One of the things that we came across was the regulator not quite understanding how many times a customer might be contacted. They asked us to limit contacts to a customer in writing twice and verbally twice a week. Initially, this was to include attempts, but when we explained we would probably have to close the doors to the business there and then if that was the case, they eventually agreed on actual contacts, so speaking to the customer and leaving a message. Once the s166 was completed, we asked for this limit to be relaxed to allow for ad hoc incoming communications from customers, and this was agreed to be increased to three times, as this was something that they intended to look to roll out to the wider industry.

The regulator wants to be confident that the regulatory requirements it bestows on the industry can be supported through the analytics and technology available to the institutions in the industry

FH: Just because three sounds like a small number, it does not mean that the FCA are not right. If you think about it, with a ‘can’t pay’ customer, you speak to them twice and send them a letter in a week, that is probably enough to take them onto the next stage of whatever you need to do. If they are a ‘won’t pay’, you could send them 300 letters and they still would not respond!

Where are the benefits to be found in automation? BC: I feel that we are off the pace in the UK. So, if you take the story of WeBank, which I believe has had its licence for just over 14 months, they had the advantage that they have a social-media channel with 700 million subscribers; 400 million view it for a minimum of some two hours per day, 200 million have their credit cards lodged March 2017

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