Data holds the key to helping vulnerable consumers

None of us would imagine credit could be obtained without the lender first checking your credit record to assess your ability to be able to pay it back.

So why do so few lenders use the same checks when you fall behind on your bills? Wouldn’t it make sense for the lender to take another look at your credit record to try to get a better understanding of your current circumstances before pursuing you for repayment of the arrears? Perhaps they might find out that you’re behind on any other bills? Find out whether this might be a simple oversight or a problem with your service, or a sign of deeper financial problems?

Despite the efforts of the Financial Conduct Authority (FCA) and other industry regulators to get creditors to focus on treating customers fairly (TCF) and fair outcomes, it seems that many creditors undertake debt collection activity without first carrying-out the most basic of checks - despite this data being plentiful and very easily available.

The result? One-size-fits-all debt collection strategies, generic communications (letters, emails, SMS) and too much reliance on the customer to get in touch before any adaptation or customisation of treatment is considered. Is it any wonder that those customers who need help the most are the ones least likely to engage?

At TDX Group we have been using credit reference agency (CRA) or ‘bureau’ data from our parent Equifax for many years in order to enrich our view of our clients’ consumers and businesses. We believe that better outcomes are delivered by understanding the customer - not just better and fairer for customers, but also better returns for the creditor.

This is most especially true for identifying the potentially vulnerable - whether that be a long-standing issue or perhaps a consequence of the current coronavirus crisis. Our Financial Vulnerability Indicators will help to identify low income households or those that have suffered ‘income shock’ or to spot concerning patterns of consumer behaviour. For sure, data won’t tell you everything, but it will certainly act as a strong indicator to what treatment may or may not be appropriate. Look at the data before you act.

Effective use of data will enable creditors to improve their customer treatment, especially the most vulnerable, at the same time as increasing returns. It may sound like magic - but it isn’t. If you want to know how this works in practice, speak to us NOW. Your customers deserve better treatment and outcomes which are better for all.