Credit Management April 2024 issue

INTERVIEW
Commercial collections, Alan says, has often been considered the poor
relation of the collections industry: “Most agencies are only interested
in the big portfolios of consumer debt which means commercial debt
is often overlooked,” he continues. “It also means that agents don’t
have the skills or knowledge required, or an understanding of how
to access even basic information from Companies House, which is
essential if you are trying to collect from a business.”
Early success
One of the reasons for MIL’s early success was that its launch coincided
with a big shift by companies to move their credit teams offshore:
“There was an awful lot of outsourcing overseas going on at that
point,” he says, “and to an extent there still is, with call centres
being set up in India and South Africa, for example, to drive greater
efficiencies when managing high-volumes of cases. But this gave us
an opportunity to focus on quality.
“Much of our business in those early days was coming from the
debt purchasers, but we also began to target specific, commerciallyoriented
sectors in the non FCA-regulated space, such as collecting
rent arrears, for example, and working with utilities in collecting
their business-to-business debts.”
Alan says that after the crash and before the emergence of the FCA,
the market began to recover, and for a time was positively buoyant.
With tighter regulation, however, many of the debt purchasers became
less inclined to outsource work on a contingency basis to the point
that the flow of work virtually stopped and the landscaped changed
irrevocably: “We used to receive regular instructions from debt
purchasers as part of their respective panels, but this work steadily
drifted away,” he says.
“Today we still have some regulated work (and are FCA authorised)
but it’s not an area where we particularly focus. It tends to be legacy
accounts, but there are also debts relating to sole traders and that
kind of thing that’s treated as ‘regulated’ so being FCA authorised
is important.”
One way in which the landscape has changed over the years is the
way in which individual collectors can be remunerated: “We can’t
remunerate individuals based on the money they collect,” he explains,
“because you are opening yourself up to compliance issues. But you
end up with a ridiculous situation where the agent could be paid
more for not collecting a debt, rather than for doing the job for
which they are employed and which our clients have engaged us to
do. There is also no longer the scope for negotiation with the debtor
that there used to be.”
Customer outcomes
Alan is not convinced that FCA regulation has, on balance, helped
improve customer outcomes: “They have now made borrowing money
significantly more difficult than it ever used to be,” he explains. “Now
you could argue that this is a good thing as it stops more people
from getting into debt, but it has added huge amounts of cost to the
lender, and it is the honest consumer who ends up being penalised
for it,” he says.
“I am sure there are many industries that benefit from tighter
regulation, but I’m not convinced it has benefited our industry. It’s
a separate point, perhaps, but arguably the mistake that was made
after the crash was that all of the bad loans were socialised and they
“In setting up
the business, the
mission was to
always provide a
quality service”
Brave | Curious | Resilient / www.cicm.com / April 2024 / PAGE 14