Credit Management November 2022

More documents

Recommendations

Info

NEWS SPECIAL - EXCLUSIVE Creditor communication is key to helping consumers in financial difficulty NEW research shows two in three StepChange clients surveyed felt they could have been referred to debt advice sooner by their creditors, underlining the need for earlier intervention, constructive communication, and proactive signposting to debt advice. A new report from StepChange Debt Charity and Amplified Global using the lived experiences of people in debt highlights the crucial role communications from the financial services sector and other creditors can play in helping consumers in financial difficulty. The report, entitled Mixed Messages, assesses the extent to which communications from creditors help people take action to resolve their debts. It finds that while communications can sometimes be effective, many of those surveyed said they faced barriers to getting the help they needed. Only a minority felt the communications they received had helped them understand their options or reassured them that help was at hand. Initial barriers to getting help included feelings of shame and embarrassment (56 percent of respondents), a lack of awareness about the seriousness of their financial situation (35 percent) and a lack of information about how debt advice could help them (34 percent). These barriers were often found to be compounded by communications from lenders. Nine in ten survey respondents said they triggered negative emotions including fear, helplessness and being overwhelmed. The common use of legal and regulatory language was regularly found to inhibit understanding and reinforce negative emotions. Just 38 percent of respondents felt that the communications they received helped them understand their options and only 28 percent of people felt these communications reassured them that their creditors would help them solve their problems. Overall, more than two thirds (69 percent) of those surveyed felt they could have been signposted to debt advice earlier, with over half (53 percent) of StepChange clients surveyed waiting more than a year before seeking debt advice. The Financial Conduct Authority’s final Consumer Duty rules raise expectations on the consumer outcomes delivered by both communications and support offered to people in financial difficulty. With the cost-of-living crisis affecting the finances of so many households, the report aims to establish an open dialogue between the advice sector and the credit industry to address these issues and ensure a clearer, more “As tough as it was, it was worth it’’ GARY Brown, CEO of Debt Register, crosses Tower Bridge as part of his marathon attempt to complete the 26.2 mile run around the capital, a challenge he eagerly signed up for at last year’s British Credit Awards. Gary was running the London Marathon on behalf of Place2Be, a London Based Children’s Mental Health charity that specialises in improving mental health care within schools. Having completed the race in a personal best time of 3 hours, 50 minutes and 47 seconds, Gary was pleasantly surprised at his final time as well as the £2,435 he raised for Place2Be: “As tough as it was, it was worth it. To raise so much money for a charity doing such great work made all the blisters and pain days later more bearable!” Brave | Curious | Resilient / www.cicm.com / November 2022 / PAGE 6
NEWS SPECIAL - EXCLUSIVE ❝ “We have known for a very long time that early engagement between customers and those collecting the sums they owe is the best way to avoid problems developing and for those customers to gain access to support and forbearance where needed,” – Chris Leslie, Credit Services Association .. reassuring message on how and where to access help. The findings echo those published by the FCA in June of this year, which also highlighted the need for firms to be swift to respond to consumers in financial difficulty, particularly in the light of the ongoing cost of living crisis. Its Dear CEO letter to more than 3,500 lenders reminded them to provide tailored support to struggling borrowers, including effectively directing customers who need it to money guidance or free debt advice. In response to the report, StepChange believes the Consumer Credit Act requirements on creditor communications should be revised to ensure content prescribed by legislation and rules does not overwhelm people and lead them to disengage. StepChange Head of Policy Peter Tutton says creditor communications need to be simplified: “These findings are designed to help the advice sector and creditor organisations decide how best we can work together, and with regulators, on practical steps that would deliver earlier and better identification of financial difficulty and vulnerability, improve the effectiveness of communications and ultimately improve outcomes for customers. “By developing messaging that focuses on helping people to resolve their situation, empathetic communications that recognise the emotional impact of financial difficulty, and the presentation of a simple, clear plan of action, creditors can ensure better outcomes for more consumers. We hope the experiences outlined in this report will inform further steps by government, industry and regulators to improve the effectiveness of creditor-consumer dialogue and get people to the help they need earlier and with less anxiety.” Responding to the StepChange report, Credit Services Association Chief Executive Chris Leslie told Credit Management that it is in everyone’s best interests – customers, creditors, and collections agencies – to make dialogue and discussion as easy and accessible as possible: “We have known for a very long time that early engagement between customers and those collecting the sums they owe is the best way to avoid problems developing and for those customers to gain access to support and forbearance where needed,” he explains. “That the report highlights the arcane and outdated regulatory barriers of the Consumer Credit Act echoes calls for reform we at the CSA have been making for some time, namely that the Government must move forward with plans to end the formulaic statutory notice mailings which are clearly unnecessary and potentially confusing for customers. The current legislative framework is far too restrictive to enable truly effective communication. “But this is clearly only part of the wider issue of driving earlier engagement with those in financial difficulty and encountering challenges coming from other sectors of the economy. There is now widespread information and signposting for customers towards free debt advice but the ongoing lack of engagement is still a significant challenge that all quarters, including debt advice providers, will need to address.” Equifax partners with PrinSIX to enable Telco’s to bolster social tariff outreach EQUIFAX and PrinSix have facilitated an Open Banking solution for KCOM, a Yorkshire-based broadband provider, to create what it says is the UK’s first internet service provider (ISP) accepting applications for a social tariff online. Social tariffs give eligible low-income households the ability to access cheaper deals from their service providers. Social tariffs were applied to broadband and mobile bills in the summer to tackle the rising cost of living. Despite social tariffs being offered by Telco’s, only two percent of those eligible for the discount have applied. Due to the lack of uptake, the Government is increasing pressure on Telco’s to close the gap – but many are relying on outdated systems that result in applications taking up to four weeks to be approved. Andy Sacre, Product Director of Open Banking at Equifax UK, says using technology, like Open Banking, to help more people access this utility is the exact type of action Telco’s should take today to combat the rising living costs: “Our partnership with KCOM and PrinSIX has replaced out-dated approaches with intuitive and personalised application journeys,” he explains. “This reduced the application timeline for social tariffs on broadband from four weeks to four minutes an incredible jump in efficiency. Ultimately, this means those in the greatest need of additional financial help will get it quicker.” Andy Sacre – Product Director of Open Banking at Equifax UK. Brave | Curious | Resilient / www.cicm.com / November 2022 / PAGE 7
Page 1 and 2: CREDIT MANAGEMENT CM NOVEMBER 2022
Page 3 and 4: 28 CLIMATE CONTROL Chris Leslie 10
Page 5: CMNEWS A round-up of news stories f
Page 9 and 10: NEWS FOCUS Firms turn to tech and d
Page 11 and 12: INSOLVENCY AUTHOR - Brendan Clarkso
Page 13 and 14: OPINION AUTHOR - Glen Bullivant FCI
Page 15 and 16: ESG Clear thinking The importance o
Page 17 and 18: COUNTRY FOCUS AUTHOR - Adam Bernste
Page 19 and 20: COUNTRY FOCUS AUTHOR - Adam Bernste
Page 21 and 22: Thursday 2 February, Royal Lancaste
Page 23 and 24: OPINION AUTHOR - Ant Persse FCICM
Page 25 and 26: On-Demand | Online | Face-to-Face M
Page 27 and 28: Fill your vacancy or find your next
Page 29 and 30: CONSUMER CREDIT AUTHOR - Chris Lesl
Page 31 and 32: CCeeer ttiiiffiiiccaatteee ooff CCo
Page 33 and 34: The dollar hurts developing countri
Page 35 and 36: BUSINESS AND INDUSTRY AUTHOR - Adam
Page 37 and 38: BUSINESS AND INDUSTRY AUTHOR - Adam
Page 39 and 40: Each of our Corporate Partners is c
Page 41 and 42: Shortlisted as Debt Collection Agen
Page 43 and 44: YOUNG MONEY AUTHOR - Roshika Perera
Page 45 and 46: NEW AND UPGRADED MEMBERS Do you kno
Page 47 and 48: LEGAL MATTERS AUTHOR - Peter Walker
Page 49 and 50: CICM MEMBER EXCLUSIVE Your CICM lap
Page 51 and 52: CREDIT CONTROL TEAM LEADER West Lon
Page 53 and 54: ON a chilly Tuesday evening in Sept
Page 55 and 56: HR MATTERS Advantage by deception A
Page 57 and 58:
FOR ADVERTISING INFORMATION OPTIONS
Page 59 and 60:
View our digital version online at
show all

Credit Management November 2022

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?