The fast-rising cost of living is the kind of broad economic shift that affects everyone within the Financial Services ecosystem. One of the most immediate effects is consumers who have quickly found themselves with substantially increased regular expenses which leaves them struggling to make repayments. The FCA has made it clear in a letter sent to more than 3,500 lenders last week that they expect firms to do everything they can to help their customers who have found themselves in difficult circumstances.
The FCA’s recent work on Borrowers in Financial Difficulty showed that even before the landscape shift, we’re seeing right now, this was an area of concern. Whilst they found examples of firms delivering good outcomes and taking all necessary measures to encourage customer engagement from vulnerable customers, they also found some firms were not offering the right communication methods, not taking the time to understand customers’ circumstances, not appropriately tailoring forbearance to those circumstances, and a litany of other failings which together paint a portrait of many businesses just not quite doing enough to help their customers who need it most.
It’s an unfortunate reality that current circumstances are creating two key concerns from a customer vulnerability perspective – first, there’s the creation of newly vulnerable customers, and second, those people who were already vulnerable will face some of the most difficult changes and become more vulnerable. Combined, I think we’re going to see a sharp increase in the demands being placed on business’s Collections and Complaints staff.
Those staff will need to be mindful of the extensive FCA rules and expectations relating to Treating Customers Fairly – MCOB 13, CONC 6,7 and 5D all make clear requirements and expectations on “firms dealing with borrowers in financial difficulty”. This is all happening in the run-up to the new Consumer Duty, with a final announcement detailing the new rules expected next month, and the implementation deadline set for April 2023. That set of new expectations will mean there is an absolute need to be right-first-time and the increased responsibility of firms to ensure the best possible outcomes means that tackling the rise in demands on their Collections and Complaints departments is not going to be straightforward.
Businesses need to make sure that they are using a wide range of communication channels so that it’s as easy as possible for customers to access support. They need to make sure that repayment plans and forbearance agreements are appropriate to the specific customer’s vulnerability, and that customers are given a range of options. They need to have a team that is big enough to handle the number of customers – but having the right number of people isn’t enough. Businesses need to ensure they have properly trained, highly skilled staff talking to these customers, asking the right questions in an empathic manner and ensuring the customer feels heard and understood.
I’ve heard some stories of businesses with no capacity for new hires drafting in staff from other business areas to handle the rise in demand. If those staff don’t have the appropriate understanding of vulnerability and Consumer Duty, it could lead to potential harm to the customer who fails to receive the proper support, there’s a risk of that leading to regulatory investigation and there’s also the question of how that affects staff – if someone who never wanted to work in Collections is suddenly forced into that role, they may look for other work elsewhere.
As specialist Financial Services recruiters with substantial experience in the Collections and Complaints space, Kind Consultancy may be able to help your firm. We work with a number of experts who can train existing staff, or we can provide skilled teams of Collections Agents or Complaints Handlers who can assist on an interim basis while you carry out permanent recruitment. In some cases, we have even provided firms with full teams who they have taken on permanently. Whatever your situation, we always make sure we only provide clients with contractors and candidates who we are confident have the skills and knowledge to keep you on top of regulatory changes and ahead of the competition.
For a confidential discussion, contact me on 0121 643 2100 or firstname.lastname@example.org