Consumers across the UK are currently facing the worst cost-of-living since the 1970s – with petrol prices rocketing to record figures in March and no end in sight to the ballooning cost of energy we’ve experienced so far this year.
Inflation is expected to reach 7% in 2022 according to the latest Bank of England inflation report. With wage inflation failing to keep pace and an uptick in redundancies following the end of the Covid furlough scheme, many face severe financial difficulties. Indeed, many are already taking on unsecured debt in order to pay household bills according to Bank of England figures.
It’s predicted that millions of people will struggle to repay mortgages, loans, credit cards and debts, instead prioritising bills such as Council Tax, or in the worst cases, simply ensuring they can put food on the table.
Credit institutions including banks, building societies, credit card companies and utilities would be wise to start preparing now. We’re anticipating a surge in the average percentage of customers in arrears, from the typical 3-4%, to around 12-15%.
What help is available for consumers?
There are schemes in place to help consumers manage their financial difficulties, like Breathing Space introduced in May 2021. This entails a 60-day freeze of interest, fees, and charges on debts, protecting customers against any enforcement action.
Despite this 60-day rebate, Collections and Recovery teams will undoubtedly be under pressure to work with consumers to help reprioritise their finances and work out a way forward that best suits their individual circumstances.
Frontline staff will need to have experience of sensitively handling individuals in financial difficulty and knowing how to help them navigate schemes such as Breathing Space, balanced with strong negotiation skills to work out a repayment plan that, ultimately, works for all parties.
Lack of experienced personnel
It’s fair to say that there hasn’t been this level of financial strain on consumers since the recovery from the 2008 financial crisis. As a result, there’s been limited investment in tools and training in this area. Many Collections and Recovery teams simply haven’t dealt with consumer debt on this scale before.
The staff with experience of the 2008 financial crash have by and large moved on from customer facing roles, leaving less-experienced agents to handle difficult conversations with customers in significant financial distress. At the same time, the Great Resignation has hit almost every industry, further impacting on a shortage of well-trained staff handling customer calls and cases.
Many organisations will be facing a staggering increase in calls from customers in financial difficulty or classed as vulnerable, while already struggling with understaffed teams operating at maximum capacity.
Leverage next-generation technologies
My advice would be to get ahead of this perfect storm by looking at how you’re going to optimise the capacity of your Collections and Recovery teams. And often, the key to this challenge lies in harnessing the power of automation so you can reserve your finite human resource for where it’s truly needed.
RegTech products such as Recordsure AI Voice, for example, offer intelligent speech analytics solutions that allow for superior transcription of 100% of client conversations with in-built topic classification and risk-scoring capability – enabling you to optimise your operations, provide added supervisory oversight and ensure fair customer treatment. What’s more, this AI tool enables your staff to be more efficient and brings focus to potential risk cases, so your teams can complete the quality review process in half the time.
Increased consumer demand will inevitably mean increased regulatory scrutiny. That’s why forward-thinking businesses are already starting to invest in cutting-edge assurance technologies – driven by smart AI and machine learning – to level up their compliance monitoring and evidencing capability.
Start the process of augmenting your team with the power to quickly and accurately handle and review customer calls now. That way, when call volumes inevitably start to rise, you’ll be able to provide every customer with a transparent, personalised service – that leaves no stone unturned – without sacrificing efficiency.