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In Focus Collections


Compliance is key, but not the only key!


Going beyond ‘tick-box compliance’ to genuinely understanding collections


George Badejo-Adegbenga Legal, risk and compliance director, Loans 2 Go george@loans2go.co.uk


It is understandably crucial when setting up a collections unit to make clear and effectively communicate the ‘do’s and don’ts’, especially the ones likely to result in financial or reputational loss if not adhered to. Firms are generally keen to bring home to


their employees the importance of complying with legislative and regulatory requirements to the extent that some forget about ensuring their collectors and employees understand the unit’s primary purpose.


Primary purpose A collections unit is generally formed to ensure monies owed to the firm are promptly recovered. Therefore, collectors should first be trained to understand and appreciate why they have been employed, and then how to ensure they carry out their role within the firm’s policies and guidelines (compliance). Having worked in various financial firms


over the past 15 years, I have witnessed collection managers make the mistake of only focussing on regulatory and legislative rules with little or no emphasis on effective collections. This mistake always results in the same


poor customer outcome, that is to say: more customers failing to repay their debt. This is generally not because they cannot afford to repay, but because collectors do not understand how to effectively collect.


Quality framework In some cases, I have witnessed collection firms introduce a compliance-focussed quality framework that ends us failing them. Having a quality framework is very


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important as it makes clear what good looks like and how to measure collectors’ performance, however a quality framework is far from perfect unless it encompasses all the necessary skills and knowledge required to succeed as a collector, which will include compliance. Compliance is crucial, but it must not stop


there, one must first understand collections. So, what does understanding collections really mean?


Understanding collections Understanding collections means: l Knowing how to attract and recruit good collectors. Good collectors are proficient in critical thinking and solving problems. Here are some of the characteristics to look for


when recruiting a great collector: l


Great listening skills. l Confidence and good instincts.


l Salesmanship – an effective collector is skilled at making a debtor want to repay


their debt. l


Being an excellent negotiator. l Empathy and good judgement. l Persistence.


l Ability to overcome objections. l Creativity in solving problems. l Being fair and trustworthy.


l Being able to retain great collectors as they are ultimately the firm’s asset and without them, your bad debt will continue to grow beyond considerable measure. This can be done in many ways, for example by paying competitive remuneration and offering other perks that are widely beneficial to employees, such as discount shopping and free dental insurance.


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A collections unit is generally formed to ensure monies owed to the firm are promptly recovered. Therefore, collectors should first be trained to understand and appreciate why they have been employed, and then how to ensure they carry out their role within the firm’s policies and guidelines (compliance)


l Understanding the principles behind the rules and regulations. One must understand what the framers of the laws, rules, and regulations governing the industry were trying to achieve to ensure accurate compliance. For example, I have seen collection units


mistake the Financial Conduct Authority’s ‘treating customer fairly’ (TCF) principle for ‘treating customers nicely’, thereby failing to bring home to customers the consequences of not repaying their debt. Some do this because they believe TCF


is about saying what the customers like to hear. Such an approach is wholly unfair and contrary to the TCF principal. l Having an all-encompassing quality framework that sets expectations on all the skills required to succeed as a collector (not only compliance) and creating a culture that


February 2019


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