Collections and recoveries in a perfect storm

In a new world of increasing regulation, growing ESG commitments and the need for ethical collections during a continuing cost of living crisis, where do creditors go from here?

There can be little doubt that our current economic climate is both complex and challenging. Consumers across the UK are under huge financial pressure, with the cost-of-living crisis forcing them to juggle their finances. From energy and entertainment to fuel and food, costs are on the rise, and there’s no sign of them coming down any time soon.

This is having a big impact on consumers throughout the UK. In fact, this year the total personal debt in the UK is estimated to reach £1.84 trillion, and the average debt per person is estimated to rise to £34,546.

For creditors, pressure is being applied from almost every direction. With record numbers of households struggling to afford their communications services, Ofcom is urging telecoms firms to do more to support their consumers. And Ofwat and CCW – the consumer representative body for water consumers in England and Wales – recently wrote a letter to all nationwide water companies, urging them to outline their plans for how they intended to help their consumers through the cost-of-living crisis.

But what does this all mean?

Late and non-payments are very real risks

The reality is that many consumers are having to make difficult decisions about who to pay, and when. Most will be allowing some of their debt to go unpaid for as long as possible, while others will default entirely on a debt, forcing you – the creditor – down the legal path. And nobody wants that.

Time for a new approach?

The fact is, in today’s challenging economic environment, if you want to reduce the risk of a debt turning bad, it’s vital you adapt how you approach collecting in the first instance.

Early intervention is key. The earlier and better we understand who’s most at risk, the more we can do to protect those individuals.

It’s also a good idea to build a relationship by staying in close contact with consumers in debt. You can then make a more well-rounded assessment of their ability to pay, and their willingness to settle their account.

That said, for many creditors the most effective avenue is to outsource collections by working with a professional debt collection agency. We work with a best-in-class panel of expert debt collection agencies, all of whom we support with our unique data insights and proven strategies for communicating effectively with consumers, including the most vulnerable.

Here's how we can help:

  • The expertise of collection professionals
    • Partnering with experienced experts can help not only when you might already be struggling to recover a debt, but before things even get to this stage. With proven strategies that have been hard-tested over many years, the professional debt collection agencies on our panel are better placed to deliver results than in-house resources
  • Reducing your costs, and saving you time
    • Right now, the relentless pressure to reduce costs and improve collections while treating consumers fairly can often seem like mutually exclusive objectives. That’s why we believe the answer is to work smarter, to be led by data science and to use analytics and segmentation to your advantage – so you can invest your resources in the right way.
  • Responding to increased consumer protections
    • Of course, we can’t overlook the fact that all collection activities across the UK are being conducted against a background of increasing regulation across all sectors. So while we know and understand you are concerned with how you can support vulnerable consumers, you also need to ensure you’re evidencing what you’re doing to satisfy the regulations. And we can help you with that.
  • Balancing compliance and result
    • You need to be fair, you need to get results, and you need to do so responsibly, ethically and efficiently. It’s a task, but one which is made all the easier by our robust collection strategies – proven to maximise collections while also allowing you to demonstrate that you are treating consumers fairly

What about sustainability?

Businesses are increasingly being called upon to disclose more about their environmental, social and governance (ESG) performance and strategies, yes. And again, working with partners who have carefully considered ESG visions – that place the consumer at the heart of every decision – will ensure collections never come at the cost of your reputation.

Supporting your own employees

In terms of social value, there is a premium placed on debt service providers who contribute positively to their community, and who show a dedication to improving the quality of life, career prospects and training of their staff. That’s why we are finding many who operate in the collections sector are seeing the benefits of skills investment and apprenticeships for their colleagues. These investments illustrate good employment practice and a long-term commitment to local economic contribution.

At TDX we are on a mission

And that mission is simple. We are committed to redefining the debt industry. In particular, we are looking to lead the way by raising standards in ethical and effective debt collection. And that means…

  • Understanding the risk, helping those in need, promoting early interventions, and improving communications for consumer clarity.
  • Constantly improving services for consumers, including debt payment plans and understanding affordability. As well as ongoing investment in training for better support, especially for vulnerable individuals
  • Utilising unique data insights from Equifax – including credit files, bank accounts, quality checks on debt collection agencies, and more – to better understand and support consumers.
  • Working solely with top partners who share our passion for enhancing the debt sector – improving consumer services, raising industry standards, promoting ESG principles etc.
  • Enhancing services to boost money management confidence. Creating opportunities in schools for vital financial skills

We are TDX Group.

Contact us here to find out how we can help your organisation