Credit Management magazine October 2017

COLLECTIONS businesses are
subject to a wide range of
regulation – from the rigours of
the Financial Conduct Authority
(FCA), to specific sector
regulation for water, gas and
communications suppliers. With the burden
of compliance and the consequences of poor
customer treatment higher than ever, is it time
for a single system of regulation?
EOS Solutions UK Chief Executive and
CICM Think Tank member Stuart Knock thinks
so. “It would make more sense if the practice of
debt collection was regulated rather than the
type of debt being collected,” he says.
EOS handles both retail finance, which is
regulated by the FCA, and utility debt – which
does not fall under that remit. Stuart says in
practice it is very difficult for collections
businesses in this situation. “Utilities tend to
talk about the authorisation standards but they
don’t fully understand what FCA-authorisation
means,” he adds.
The cost of compliance for FCA-regulated
businesses is significant: “On some utility
panels you are up against some who only do
utility debt so can be more competitive in their
pricing, and more liberal about what they do
and how they approach the debt.”
PERFORMANCE DIFFERENCE
Stuart says he has the impression from nonregulated
creditors that there is a performance
difference. “They must be more assertive in
their negotiations. If there was one regulator
across the piece that wouldn’t happen.”
Any suggestion that firms behave in
different ways for different debts is not
acceptable, Stuart says, adding that the
FCA does not expect that approach within
businesses it regulates.
With well over 90 percent of Credit Services
Association (CSA) members FCA-regulated,
some question whether there is really a
problem that needs solving.
“I think it’s a theoretical risk rather than
an actual risk,” says Sue Chapple, Strategic
Account Director at Indesser, the joint venture
between the Cabinet Office and TDX that coordinates
the collection of £22bn of public
sector debt.
“The standard in the market is FCA
regulation, and in practice creditors are
already looking for firms that abide by those
standards,” she says.
“It’s very easy to say there should be one
standard but I can also see the cost and effort
and impact in doing so. The fact that some
companies have to be FCA-regulated moves
everybody up – like Treating Customers Fairly
(TCF) did – it just takes time.”
Sue adds: “If you’re the owner of the debt
and are using a DCA it’s up to you to make
sure that DCA behaves appropriately. How
you reward your agencies will drive their
behaviour.”
PRACTICAL ISSUES
Even if it were desirable to bring all debt
collection under one regulatory umbrella, the
practicalities make it unrealistic, according to
John Thompson, Head of Compliance at Hoist
Finance.
“There is some logic to having a single
regulator, and a strong argument that it would
bring a level playing field not only to the
collections agencies, but also to the consumer,
who will be treated fairly and consistently
regardless of the ultimate creditor. But is
it really practical? The FCA already has to
regulate tens of thousands of firms in the
consumer credit space, and is arguably already
too stretched.”
He adds: “Creditors in the utilities sectors
– water, gas, electricity – are heavily regulated
in their own right, with consumer protection
at the heart of what they do. It is right that we
should be looking at the FCA’s experiences,
and the work undertaken so far, to see what
lessons can be learned, and whether a set of
common principles could be adopted.
“In our experience, agencies that collect
both FCA-regulated debt, and debt that is often
referred to (erroneously) as ‘unregulated’, tend
“It would make more
sense if the practice
of debt collection
was regulated rather
than the type of debt
being collected,
EOS handles both
retail finance, which
is regulated by the
FCA, and utility debt
– which does not fall
under that remit.’’
continues on page 34 >
The Recognised Standard / www.cicm.com / November 2017 / PAGE 33