Under normal circumstances, working with customers who are experiencing financial difficulty is one of the hardest parts of working in financial services. It’s hard for the customer, difficult for the staff who speak with them and challenging for the firm to balance fairness with commercial reality. But as furlough schemes come to an end, government-backed lending schemes fade away and unemployment rates skyrocket, the focus on Debt Management functions is only going to increase.
Firms need to move quickly to find ways to care for their customers, support their staff and balance the books without increasing the risk of operations and the risk of future remedial action.
The compassionate approach
The financial crisis of 2008 is often rightly cited as one of the most difficult times for financial services, and the economy as a whole. But it isn’t the most difficult day I remember in my financial services career. That day was 7th July 2005. The day of the London bombings. I was working in a Collections and Recoveries contact centre operation that ran both an inbound and outbound telephony service.
When the news broke about the bombings I happened to be sat near one of the senior operations managers. As someone who had recently been on the phones with customers, he turned to me and asked my opinion on whether he should suspend dialling operations. This was a multi-million-pound decision for the bank, a fact of which I was very much aware.
My answer was simple. I wouldn’t want to be phoning someone about their credit card debt when they are trying to reach a loved one to find out if they were ok. That would be an awful customer experience and a terrible experience for me as an employee as well.
I have no idea if what I said influenced the decision but we turned the dialler off that day and switched everyone to inbound-only. I have never before or since been prouder of the human side of financial services.
There is a growing debt crisis looming on the horizon. Not just in the UK, but across the globe. People are losing their incomes and government-backed schemes designed to carry them through are coming to an end just as a second wave of COVID seems destined to hit. Unemployment rates are rising and this is a sure sign that credit-defaults will shortly skyrocket too.
Lenders are rightly concerned. Mortgages are at risk, credit cards, secured and unsecured loans will go unrepaid at rates normally only associated with recession or depression-level events. No-one wants to repossess someone’s home but it’s an incredibly complex balance to manage.
The firms I speak to remind me that things have changed since my days in a Debt Management function. Customers are treated far more fairly these days, with a greater appreciation for personal circumstances, wider debt and financial positions of the customer and understanding of potential vulnerability. The firms I speak to are as concerned, if not more so, by the potential impact on customer trust and advocacy as they are their own bottom line.
Banks are ramping up their operations to cope with the increase in customers requiring debt management services. But scale-ups of this magnitude also risk inexperienced staff handling incredibly delicate and nuanced customer circumstances. The risk of getting it wrong is far more likely when the pressure is so intense, and you are new to the role.
Like so many other large-scale operations, there remains a huge reliance on sample-based observation and checking methodologies. These are outmoded concepts and ultimately struggle to identify systemic issues in large operations. They also struggle to properly and accurately identify individual agent coaching needs and rely heavily on risk-based approaches. Only when someone has failed a check are they more comprehensively sampled. At which point, they know they’re being more frequently sampled.
The implications are four-fold. The customer can be disadvantaged if their case isn’t handled appropriately, potentially going unmonitored until a complaint is made. The colleague can be unfairly assessed (both positively and negatively) based on random sampling of their interactions. The firm puts both their reputation and commercial position on the line with the threat of future remediation if found to have acted poorly. Finally, the banks themselves must account for customers in financial distress as part of their capital adequacy commitments.
All this at a time when the stakes for customers couldn’t be higher.
Take it from someone who has spoken to a single-mother of three children about how far over her credit limit she is, right after she lost her job. We are not talking about mortgages, loans and credit cards in the eyes of the customer. We are talking about their lives and their children’s lives. Their futures, and their children’s futures. There is no greater responsibility.
I am reassured by the steps that the FCA and the major players in banking have taken over the years to better understand this complexity, to identify and better comprehend what vulnerability means. Customers mental, physical and emotional health are all factors when speaking to them about financial difficulty. But I worry for my former colleagues and those that do the role I once did because it is hard, and hard-wearing. They will never be busier than they are about to be and they need support.
COVID has changed the way that our society operates for most of 2020. It seems likely that it will continue to do so into 2021 and who knows for how long afterwards. The financial ramifications will have a much longer tail.
Proactive compliance
How the Debt Management sector handles the coming few years will have implications not only for the reputations of their firms, or even the financial services industry, but for our society as a whole
Technology can help these firms to drive better, more consistent outcomes for their customers. Doubling and tripling any workforce comes with incredible risk that, if not properly monitored and supported, leads to failures of process and poor outcomes for consumer and lender alike. Evidencing that you’ve treated the customer fairly, every time, at a scale that seems impossible is something that can only be achieved with smart, sophisticated monitoring and evaluation tools.
I hope we do not see large remediation scandals in two-to-three years’ time. Because if that happens we will have collectively failed each other. It will mean that we have failed to recognise that unlike the financial crisis of 2008, there is no blame here. This isn’t about inappropriate lending. This isn’t PPI. This isn’t the customer’s fault either. This is a set of circumstances that have been wholly out of anyone’s control. And we really can afford to make sure everyone comes out the other end having been treated fairly.
Steven Hewlett-Light, Head of Product, Recordsure
