201509 CM September

ONE IN EIGHT AUSTRALIANS
LIVES IN POVERTY. TO PUT THAT
INTO NUMBERS, THERE ARE
2,265,000 PEOPLE LIVING BELOW
THE POVERTY LINE INCLUDING
575,000 CHILDREN.
Executive Director of Financial Counselling
Australia, believes that the debt collection
industry is second only to the banking
industry in having made the most progress
towards helping customers in financial
hardship. Customers of utility firms,
however, can expect only limited support.
THE POVERTY LINE
One in eight Australians lives in poverty.
To put that into numbers, there are
2,265,000 people living below the poverty
line including 575,000 children. Almost
two thirds of that number (62 percent) are
surviving on social security payments.
One of the more interesting
developments in support of the most
vulnerable is the National Hardship Register,
a tool that is intended to help those in
severe financial hardship. Of those who
apply to join the register, almost three
quarters of all applications are approved.
The split between men and women is
almost half and half, although interestingly
90 percent are single. Some 45 percent
have declared mental health issues and
the majority (73 percent) have a fortnightly
income of less than AUS$1,000 (c£475).
The biggest outgoing tends to be their rent
that can often account for more than a third
of their income, while their debts averaging
AUS$5,000 - AUS$10,000. Six percent of
the total, however, have debts in excess of
AUS$40,000.
Another interesting development in
the Australian collections industry, and
one that resonates in the UK, is the use of
new technologies and thinking to improve
collections efficiency and the customer
journey. Technology is a significant enabler
to customer engagement, especially for
those who see personal contact as a barrier
to overcoming a financial problem. Firms
are developing dedicated ‘self-service’
web portals and web-chat functionality to
complement the ‘traditional’ call centre
environment to great effect, and data
analytics is now commonplace, albeit that
there is much room for further development.
The use of behavioural insights is
similarly gaining traction, looking at how
letters can be simplified both in terms
of content and presentation and even
including images and charts to prompt
greater response. Such techniques have
been proven to work in the UK with the
HMRC and the DVLA, for example, but
have also been trialled by the New South
Wales government to improve the collection
rates of court fines. By subtle changes in
text, and a better understanding of when
to ‘intervene’ in the collections cycle, it
improved collection rates by almost seven
percent - a remarkable improvement for
such an inexpensive change. It is good to
see that the FCA is following a similar route
with its recent paper on Smarter consumer
communications.
In terms of specific challenges, the
sharing of data is one that will again
resonate with those working in the UK
credit community. Surprisingly, there
is no comprehensive sharing of credit
data, neither is there any agreement or
framework to do so. Australian collectors
share similar reputational issues to their UK
counterparts; the industry is sometimes
perceived in a negative light, reinforced by
media stereotypes, even though complaints
are incredibly low. The importance of
positive customer engagement is properly
understood, and leading firms have become
much more ‘customer centric’ (much
as we no longer speak of ‘debtors’ but
rather ‘customers’). This has led to the
development of stable ‘arrangement books’
that now account for c70 percent of monies
collected.
Australian members of the ACDBA
clearly recognise the need to work closely
with the regulators on such key matters
as remuneration, and rewarding the right
conduct. ASIC, the Australian Securities
and Investment Commission, for example,
is keen to be seen to be supporting and
facilitating good conduct, as is our own
FCA. They are also hot on the subject
of clarity and transparency in dealings
between the collections agency and the
customer.
There will always be rogue operators,
another fact that we in the UK and our
counterparts in Australia have recognised.
It is interesting too that the ACDBA’s
approach, as ours, is to demonstrate that
such behaviours are the exception and not
the rule, and that misconduct will not be
tolerated by anyone within the mainstream
collections industry.
More detail on the code can be found at
acdba.com
The recognised standard in credit management www.cicm.com September 2015 27