The financial industry has been rocked by the persistent economic instability that took the world by storm in 2008. That economic instability has resulted in a significant loss of consumer confidence with a distrust of products delivered as well as how customers are treated by financial organisations. Once trust is lost, it is extremely difficult to regain.

Enter Compliance

In order to gain, regain, or maintain customer confidence, companies need to actively practice compliance. In a nutshell, compliance is the execution of all areas of business activity from initial customer service to providing effective risk management. The target is to ensure that your company is operating openly and correctly, which entails not only the keeping of the letter of law, but expressing compliance in spirit as well.

Compliance is particularly important for the financial industry, since people tend to be less forgiving when it comes to attacks on their finances. The debt recovery sector requires even greater efforts at compliance in order to garner repayments. Wescot, a UK leader in debt recovery, has personally experienced the rewards of compliance efforts over the past several years. Customers respond in surprise to agent contacts which seek to understand surrounding circumstances and provide repayment solutions based on hardships rather than simply demanding payment on amounts already predetermined by the company.

A Different Perspective

The old way of looking at compliance was through the eyes of cost. Compliance consists of numerous company-wide expenses including additional staffing to implement and monitor activities, the altering of practices and procedures, increases in employee training and the production of adequate business models, as well as complying with regulatory guidelines and paying subsequent fees. Expenses of improving compliance were (and in some cases still are) considered as barriers and thus seen as having a negative impact on company performance.

However, a change in perspective is required in order to see compliance as an investment instead of a necessary cost nuisance. Various benefits are provided by complying with customer and regulatory expectations, both of which work to build and strengthen customer trust. Wescot has found that debt collection customers respond more enthusiastically when they receive positive outcomes to their debt situation, such as agents taking the time to understand their plight and the create payment arrangements that are affordable and help to eliminate the debt in the shortest possible time.

To find out more of how compliance can help your debt collection situation, browse this Wescot short bio.

The process of debt collections has been rapidly transforming, especially over the past half a dozen years, since the financial crisis which triggered the worst blow to world economies since the Great Depression of the 1930s. The stubborn downturn has significantly reduced household incomes in the UK which has, in turn, led to a radical change in how delinquent accounts are handled. Gone are the days of reliance on traditional methods alone. Wescot, one of UK’s top collection agencies, is making much needed adjustments in order to boost success rates, notably in registered accounts pertaining to 3-month break-in delivery. Here’s a look at what’s changing.

Maximising Customer Contact Rates

Maintaining elevated rates in the area of customer contact is vital to collection delivery success. Communicating with customers allows companies to determine the underlying circumstances that lead to sluggish or faulty payments and then to effectively create a plan for repayment that meets the needs of both customer and client.

In order to optimise the rates of customer contacts, data must be constantly updated. Such data cleansing is key for maintaining the most current contact information as well as creating messages that best address individual issues and selecting the most advantageous message delivery options.

Rapid changes within the UK housing market have led to a situation where more and more people are financially obliged to rent or to live with family members for a far longer period of time before being able to purchase property of their own. In the field of debt collection this results in a far higher number of hidden ‘goneaways’, making it harder to spot those who have truly gone away and resulting in an increased number of mis-traces. The response from the tracing market is perhaps unsurprising to produce and develop an abundance of tracing solutions based on intelligent smart-data. However, as time goes on it becomes clear that use of these solutions can be seen as leading to a growing number of occurrences of mis-tracing. Essentially, these tracing solutions are simply indicative lead generators.

While the tracing companies do not as yet form a part of the regulatory scope of the new Financial Services Authority, those organisations which acquire the tracing services do. As such, any approved person who allows poor tracing solutions which result in mis-tracing to enter their product delivery chain can and will be held accountable. Debt recovery services need to adapt quickly to the changes in the regulatory environment, paying due care and attention not only to where data is sourced from but also how it is then validated and used.

There are a variety of reasons why mis-traces occur, including multi-bureaux data matching validation, the use of date of birth matches which result in un-validated addresses entering the database, non-validated new consumer addresses in CRA data submission reporting, failure to back out data which has been incorrectly updated by CRA data sharers after that data has been identified as incorrect and repeat CRA lead data capture.

As an ethical dent collection agency and one of the largest in the UK, Wescot is acutely aware of not only what the changes in the regulatory environment mean but also how the subsequent challenges must be met and overcome. Compliance is a priority at Wescot, which as a company not only leads the way in compliance standards but also in many cases helps to set the new regulations.  Posts from Wescot talk more about how compliance and careful analysis can help to reduce the incidences of mis-traces occurring.

The global recession, banking crisis and steady decline in UK household disposable income has led to dramatic changes for lenders. On top of this, a fast changing regulatory environment has led to a situation where creditors and DCAs have to fast re-think strategies in order to continue to be able to provide products which are both attractive and affordable. The drastically altered compliance landscape creates enough changes itself, yet when combined with the differences in spending and lifestyle which have emerged over the past decade things are looking very different indeed.

Collection rate delivery, which many would expect to slow during the economic crisis, actually improved after an initial decline when compared to the 2006 benchmark on prime unsecured banking portfolios placed with Wescot. This denotes a trend of improvement which may in part be related to an improvement in lending practices which has necessarily occurred due to the banking crisis, yet there are also other factors at play. Figures from 2012 show that initial three month break-in rates have declined yet once stock begins paying, underlying collections performance improves by nearly 20%. This creates a combined upturn of 15% or more.

Break-in rates are a reflection of the level of contact achieved with the customer. Companies like Wescot have been focusing on adjusting strategies in order to increase the amount of customer contact achieved, engaging wherever possible and beginning the necessary dialogue to create an appropriate and affordable payment plan which takes into account individual circumstances. Advances in technology offer increased opportunities for data cleansing to ensure that contact details are accurate and up to date and those previous bad practices in the debt recovery sector such as door-step, excessive dialling, overly aggressive letters and inappropriate tracing activity are not only unused but also unnecessary. Investment across the board in both technological improvements and analytical capability drastically increases the level of customer engagement at an earlier stage of the recovery process, making it easier to find a solution which works for all involved parties.

Wescot operates as an ethical debt collection agency, not only working well within the constrictions of the new regulatory environment but in many cases leading the way in setting compliance standards across the industry. These compliance standards have been officially recognised by both Trading Standards and the Lending Standards Board.

Establishing the residency of a customer in the world of debt recovery has become a significantly different procedure from that of just a few years ago. Not least of the changes has been the move to bring all debt collections firms under the umbrella of a single regulatory body, bringing new regulations with a more customer-centric focus than ever before. Today, ignoring the fact that a customer has failed to respond to all letters, telephone calls and other attempts at conduct is simply unacceptable, but conversely so is repeatedly contacting third parties incorrectly on issues relating to accounts which do not belong to them. In a far more compassionate and customer focused financial services environment, the pressure is on the debt collection agencies to alter strategies and be proactive in re-engaging with customers at an early stage in the recovery process in order to be able to apply appropriate treatments which are devised on a more individual level after discussion with the customer relating to their current financial circumstances.

Wescot is the largest debt recovery agency in the UK, with around five million accounts serviced each year. As a market leading debt collection agency, Wescot takes its responsibilities under the new regulations seriously, not only leading the way for compliance standards, but also in many cases playing a strong role in shaping new regulations. Customers and clients can visit the Wescot YouTube page to find out more. Wescot works to refine and deploy new strategies for customer contact on an ongoing basis, constantly analysing portfolio performance and developing innovative new procedures which encourage early re-engagement in order to be able to apply effective and affordable solutions to each customer account.

Across the industry a combination of the development of new trace products and the evolution of tried and tested formulas is occurring, resulting in more accurate tracing and more opportunities for early re-engagement. Introducing options such as alternatives to fixed-fee type services, pursuing early re-engagement opportunities and recommencing the use of products and services which are trace-led all contribute to creating an environment where the number of ‘goneaways’ can be significantly reduced and each individual customer is provided with the chance to eradicate their debt on terms which suit their circumstances, enabling them to improve their credit rating.

Aside from the debt owed to the Government in the form of taxes and miscellaneous debt by individuals, banks are owed the largest amount of money in the UK, a sum of around £8 billion. This is significant for companies like Wescot as large financial institutions such as these already have a competent and capable, long running debt recovery process. It is a large portion of the market share that independent debt management companies like Wescot cannot break into, and as such is putting pressure on the industry. The upshot of the current economic climate however, is such that despite the market share being comparatively small there is still a large amount of private debt owed to other companies, that Wescot can take advantage of, recovery rates are in fact the highest that they have been in six years since the recession.

Banks are very efficient at recovering their debts, with a working model that they have operated for decades, coupled with a mean debt of many thousands of pounds they can quickly persuade customers to part with their cash and begin repayments. However, despite recovery rates being high, independent debt management companies such as Wescot are facing another dilemma. Average people simply do not have as much money to pay back their debts on a weekly basis. The average person only has £139 to spare once essentials have been paid for, so it is taking Wescot longer to close each client’s account. Wescot has to come up with more efficient strategies given the difficulty of closing an account during this recession.

A major difference to the economic outlook today as compared to six years ago at the height of the credit crunch is that mainstream banks have long since stopped unsecured lending. So for the last two and a half years the collections flow, stock and impairments rate has decreased. Looking ahead for companies like Wescot, who rely on creditors to lend money, it is necessary that those in charge come up with another solution to unsecured lending. In this way, they will provide further business to debt recovery companies such as Wescot.

Despite the changes that Wescot and other debt management companies face in the coming years, the UK’s biggest debt recovery company is adapting and overcoming the problems they might come across to maintain their lead.

The premise of Money Advice Scotland (MAS) is to provide help with those struggling with the burden of debt or general financial trouble, including which companies are the best to approach with everyday queries. Originally, the charity was set up in the late ‘80s to provide help to the people of Scotland but the organisation has grown significantly since then, and they are open to questions from anyone living in the UK. Each year MAS holds a two day conference that brings together people from both sides of the tracks, creditors and the general public that MAS provide help to on a daily basis. This two day event is a significant day in the credit industry’s year as it gives ample opportunity for companies to find more business as well as opportunities for individuals to ask important questions to a representative face to face instead of over the phone or via email. While MAS receives a large amount of funding from the Scottish government, they also find sponsorship from many of the companies represented at their conference. Amongst high street banks and loan companies, Wescot is a debt management firm with offices in Hull, Glasgow and Saltcoats that has recently given MAS vital sponsorship money to continue their good work.

Wescot is committed to providing the best service to their customers while protecting the needs of the customers themselves. In a world where money is harder and harder to come by, this debt recovery company with offices in Hull, Glasgow and Saltcoats recognise the factors that contribute to someone struggling to repay their credit. By sponsoring MAS’s two day conference they are not only providing the charity with essential funds to keep operations going, but the debt recovery company are also able to help people directly when they attend the conference.

Throughout Money Advice Scotland’s conference, there are workshops and seminars that cover a wide range of topics with regards to finances. Issues such as bankruptcy, taxes, interest rates and general borrowing queries are covered over the two days. In addition to these formal events, there is plenty of opportunity for individuals to approach the sponsors of the events and seek advice directly from them. The conference has been successful year on year, and it is hoped that by receiving sponsorship from businesses like Wescot, the attendance rates will continue to grow.

Many employers in the UK make a lot of noise about training and development. They talk about investing in staff, and people being their most valued asset. Yet in many companies, the rhetoric is unsupported by action. Not so at Wescot Credit Services. One of the UK’s primary collection and recovery companies, Wescot has weathered more than forty years in a highly competitive industry.  It has achieved this in part because at Wescot, learning and development are taken very seriously indeed.

Wescot employs more than 650 people across three key sites in the UK. Each individual is given specific Wescot induction training in relation to their job role, but at Wescot the story does not end there. Throughout their career at Wescot every employee is given regular opportunities to discuss their performance with management, and identify areas for improvement. Wescot then provides training that is tailored to the needs of person, their job role, and the clients and customers they are engaging with.

Wescot places a high degree of focus on ensuring that its staff appreciates the needs and rights of the customers with whom they are dealing, and the principles of Treating Customers Fairly, or TCF, underpin every aspect of internal training that is provided at Wescot.

Wescot’s commitment to the continuing professional development of its staff is not limited to internal training programmes. Alongside these invaluable business-focused courses, employees are actively encouraged to engage in training outside of Wescot in general areas of study that are relevant to their role and the financial services industry, such as nationally recognised qualifications.  Wescot have a dedicated policy for granting time off for study and training in support of this.

Wescot promotes a culture of learning and training, and takes a long-term view in relation to staff development. Investing now provides employees with the necessary skills to develop their careers within Wescot, to the ultimate benefit of all concerned. It is the right of the majority of members of the Wescot team to submit requests for time off to study, and provided they can illustrate that the associated learning will enhance their effectiveness at work, such applications are generally viewed positively.

As a forward-thinking company, Wescot does not limit the training opportunities for its employees to their current job role. For those who show promise, and a willingness to progress their career within Wescot, the development of new skills through training is actively encouraged. With such a positive and proactive attitude to employee development, Wescot is sure to retain its position as one of the leading debt recovery agencies in the UK in the future.

No matter how large or small, businesses need to have a plan in place to deal with customers who default on their repayments agreements. Whether this is handled internally or externally, collections needs to be handled sensitively and by someone who you can trust, which is where Wescot Credit Services can help.

Wescot are the UK’s largest debt collections agency, with a portfolio of clients covering many big brand household names. With a strong workforce of 650 employees based across three offices in Glasgow, Hull and Saltcoats, Wescot’s team of experts are currently working to recover balances on well over five customers.

Whilst recouping funds for clients in a professional and fair manner is the core of Wescot’s business, they also provide additional services such as trace, trace & contact / cure. Trace refers to companies like Wescot utilising their verified database, and other in house resources to ascertain the correct contact details for customers, verifying key information in relation to them and then dealing with the contact in the most appropriate / agreed way.

Wescot Credit Services recently partnered with secured leading specialists Swift Advances, to provide a sublime trade support service which allowed Swift to fulfil their remediation plan. Swift Advances’ brief involved needing assistance to track down 2,000 ex-customers, and Wescot’s ‘Locate’ range of products fitted the bill perfectly.

This one-off project from Swift Advances posed an easy challenge for the Wescot team as they set about undertaking this remediation exercise in a professional and ethical manner. The purpose of this project from Swifts perspective was to gather ex-customer intelligence through Wescot, in order to issue small refunds to those who had overpaid on their loans.

Wescot’s process to gather this intelligence was highly efficient; they were able to trace 80% of the contacts required very quickly, which substantially exceeded Swift’s expectations.

Wescot have the skills and expertise to undertake trace activity and lead generation throughout client’s customer lifecycle. If for instance, contact is lost, Wescot are well equipped to source and verify new details because in this day and age, it is simply not viable for businesses to waste money on trying to get in touch using non-validated information.

Wescot fully appreciate that tracing and contact products are now a vital element of customer service, and in some instances remediation is required to resolve past process issues.

As Wescot Credit Services continues to lead the way in supplying high profile organisations with agency collections and tracing support services, they are keen to re-iterate the importance of place in client’s requirements as the heart of their business.

It has been some time since the start of the global economic crisis, and over five years on, agencies in many different markets are still dealing with the repercussions of irresponsible banking and lending. Banking debt is still the dominant force in the UK debt collection market, with average annual flows above $8 billion since 2008. Ask any senior banker and they will tell you how difficult the last four years have been.

The difficulty stems from both the management of debt, and ensuring stability for the future. There are shifts occurring and things are looking up for the better, though it is still the job of banks to take further measures for the benefit of themselves and the wider economy.

Raising capital and disposing unsecured debt

Some of the most important current priorities for UK banks are to raise capital, to improve the state of the balance sheet and to reduce leveraging. RBS’s post-meltdown actions are the perfect case study; they have reduced their balance sheet by a huge amount, and have disposed of many of their non-core assets.

RBS still have a great deal more to achieve however if they are to reduce the exposure of their balance sheet. The further disposal of unsecured debt may be good news for the debt management sector and agencies like Wescot Credit Services, but this alone will not raise the type of capital that the banks need. More significant in the improvement of the balance sheet is the disposal of divisions that are high risk, and addressing the very dangerous problem of secured consumer lending.

The management of lending debt is no longer a priority

Many would expect unsecured lending to register high on the agenda, but this would be an outdated opinion. Excessive and undisciplined, unsecured lending stopped very soon after the financial meltdown, and not too long after the financial meltdown collections for unsecured lending reached a peak. In the time between then and now, there has been a steady reduction in collections flow. Recovery rates have been steadily improving.

Now that consumer lending has recovered significantly, and has woken up to the realities of unsecured lending, lending divisions are now starting to participate in new lending to grow revenues once again. The important question for the divisions to ask themselves now is exactly how they should operate.