Refine your debt referral processes, creditors told
Creditors should work more closely with debt collection agencies to better understand the challenges facing their customers, according to speakers at this year’s Qualco Live at The Stoop.
In an address to delegates, Christian Jacob, managing director of Qualco UK, said it was time that the industry started to look more closely at their processes for passing customers to collection agencies, and update these, where necessary, to ensure they are fit for purpose.
“Debt collection companies are incredibly versatile,” he said. “They ensure the need of the clients are met, they fill the gap between legacy systems and the customer experience, and they are constantly investing in their products, which have changed dramatically in recent years.”
Mr Jacob said that the industry has “come a long way in a short period of time” but said creditors could do more to ensure that customers are passed to a “relevant” collection agency.
“We need to start thinking in new ways about how that debt is passed on. We need to engage with debt collection companies. Without these companies by your side, there will be no one left to do the collections.”
Mr Jacob’s colleague, Jan-Michael Lacey, head of sales at Qualco UK, underscored the levels of professionalism to which today’s collection industry operates, noting the transformative journey of the past 30 years.
“In the nineties, it was very much a cottage industry,” he said. “There were seemingly hundreds of debt collection agencies, most of which were family run businesses. People sent millions of letters and made millions of calls. The money just came in.
“In the early 2000s private equity and hedge funds looked at our industry and said we could do well in this, models were collated, and the industry became industrialised. Pricing went ever higher and those of us working on the contingent side thought this cannot be sustainable.”
Mr Lacey said that, in more recent years in the lead up to formal regulation by the Financial Conduct Authority, companies became more choosy about the types of debts they are wiling to take on, detailing one example in 2012, when an agency refused to take any further accounts from a payday lender, despite the profit incentive.
He concluded that the industry should embrace the collections agencies of today for the levels of service and professionalism they are able to demonstrate.
“When the FCA looked at the steps that the industry had taken to become more professional, they were pretty impressed with what they saw,” he said. “It hasn’t surprised me that the bulk of regulatory applications from the sector have ended up with an approval.”