Challenges in Debt Resolution
The GovDebt Conference will bring together government finance, debt and risk professionals to review the UK public sector finance and debt landscape. Ahead of the Conference on 11th October, we spoke to our expert speakers to get their insights and thoughts about some of the topics that will be discussed on the day.
In this blog, we asked our speakers: "What do you think the biggest challenges are in debt resolution?"
Bob Winnington, Chief Executive Officer, MALG
"One of the biggest challenges in debt resolution is MALG's reason for being and that is collaboration. Only by bringing together professionals working across the whole debt lifecycle from financial capability and lending through to collections and money advice can we ensure a seamless approach that works for all those involved as well as ultimately those in financial difficulty. At our regular virtual and face-to-face meetings and events we facilitate very frank and open discussion and debate which highlights the very different viewpoints of those working at different stages of the cycle. Whilst it is rare we get complete agreement, we do enable these parties to understand the issues faced by others and break down the barriers in communication which often create the issues in the first place. This provides a cornerstone to our culture and ethos."
Debbie Wright, Head of Debt Management, DWP
"The biggest challenge for debt resolution is the increase in Cost Of Living and the fear of a further rise. People are making tough choices about priorities, their expenditure and the amount they can afford to pay towards clearing outstanding debt. We have to continue to support and encourage customers to access resources and services available to help them deal with the difficulties they may be experiencing."
Matthew Hooper, Senior Category Lead, CCS
"Without doubt these are the impacts to the cost of living. In coming months we will see those already in difficulty forced even further under, and those that are currently balancing budgets falling into arrears. This will see numbers of vulnerable consumers increase significantly and will require greater support from creditors. Insolvency solutions, such as IVAs which are already seeing significant double digit growth, will continue to grow and creditors will need to proactively manage these, particularly public sector colleagues who may not have been overly actively engaged in the oversight of these solutions previously. This will mean taking strong decisions around the appropriateness of the solution for the indebted individual and the creditor.
To manage the increasing number of vulnerable consumers, creditors will need to get closer to them and gain a better understanding of individual circumstances, including ensuring outsourced solutions are genuinely practicing what they preach in regards to identification and treatment of vulnerability. This will put even greater pressure on already stretched resources at a time when recruitment ,even if budget is available, is exceedingly challenging. To help facilitate this, creditors can free up existing resources by implementing smart segmentation with flexible strategies incorporating multi-channel solutions, facilitating simple, self-serve journeys, enabling those able to help themselves to do so and freeing up the resources previously required to manage these individuals to focus on those in real need."
Russell Hamblin-Boone, Chief Executive Officer, CIVEA
"Debt recovery was significantly disrupted by the coronavirus pandemic, with a suspension of enforcement and debt recovery. This was exacerbated by a reduction in the number of magistrates court hearings being held and a halt to basic debt collection nationwide. Consequently, there were fewer payments made and increased levels of arrears being carried forward into the following year. Many people in debt have become vulnerable due to redundancy, bereavement and long-term ill health, coupled with higher living costs. Local authorities will need to use debt recovery tools wisely and help people to resolve their debt in order to avoid further harm to individuals and reductions in local services."
Steven Coppard, Group Director of Debt Policy and Strategy, Arum | Just
"For me it is the difficulty in changing the image of the industry to one where a debt resolution contact is welcomed as a fantastic customer experience. When customers fear the consequences of dealing with their debts and those debts therefore linger in the background for longer, it opens the way for anxiety and depression to creep in – in it’s 2015 report on Tackling Problem Debt, the National Audit Office found that intimidating letters, phone calls or doorstep visits lead to a 22% increase in the probability of anxiety or depression levels rising.
The root cause of this issue is the disparity across the different sectors in the industry, which I believe emanates from three places:
1. Different legislation governs different debts so there is no legislative or regulatory standard applicable across the entire industry.
2. There is no data standard for assessing vulnerability and affordability – so customers’ circumstances are assessed based on the capability of the creditor / its agent.
3. This leads to the hinderance of continuous improvement and customers cannot possibly know what to expect from each different creditor type
Until we can level the legislative playing field, the data playing field and the operational playing field, we will be unable to truly achieve a seamless customer journey – one that repeatedly gets 5* reviews and shakes off the stigma that so many feel subjected to today."
Join us on 11th October at etc. venues St Pauls, to hear from industry leaders and finance and debt professionals from across the UK. Purchase your pass today to get special pricing.