Debt collection can and should be done responsibly
Debts need to be collected, but the industry is not without criticism. Peter Wallwork explains
what responsible collection looks like.
Ask a politician, journalist, or the average person on the street, about debt collection, and they’re bound to have an opinion.
Not many people, however, would understand the sheer scale and professionalism of the modern-day debt collection agency or debt purchaser, or be able to quote their contribution to the UK economy.
The 300 members of the Credit Services Association (CSA) hold something in the region of 50 million accounts, totalling almost £60 billion of debt.
More importantly, perhaps, they return around £4 billion of that debt to the UK economy every year. They also fund the work of the debt advice sector, contributing to the £55 million debt advice levy, and more than £25 million of the £60 million voluntary pot for Fair Share.
What does responsible debt collection look like?
For every debt there is a creditor, and for an economy to thrive and grow, outstanding debts need to be collected, where possible. This is as true in the consumer world as it is in business.
Indeed, there’s some irony that we applaud the business community for collecting money owed, but are not always generous in our praise when it comes to recouping consumer debt.
It follows a code of practice
Fundamentally, best practice in debt collection looks like any collections agency or team paying strict adherence to the CSA code of practice, which is recognised by industry regulators, the government, and other relevant bodies.
The CSA code is also recognised by our members’ clients, which are very often the largest banks or credit card companies, who want to know that their customers’ treatment is the same when in credit as it is when they fall into debt, especially when that debt is outsourced or acquired by a third party.
It resolves complaints swiftly
With such huge volumes of debt to manage, and so many accounts, it’s not surprising that complaints are raised, although many can be quickly resolved. Agencies today have sophisticated customer services teams and well-established processes for ensuring that complaints are quickly and successfully managed.
Occasionally, too, a complaint will reach the Financial Ombudsman Service (FOS), but thankfully, this is still the exception, rather than the rule. Indeed, in many cases, involvement from CSA member organisations can be the positive catalyst to resolving complaints where debts have often accrued due to a breakdown in the relationship with the creditor.
It manages repayment
For our members, getting people to talk and communicate has always been their core business. They try to find a mutually beneficial resolution for a customer where a creditor has failed to make that contact in the first place.
Managing the repayment of an outstanding balance in an affordable way for the customer, and putting money back into the economy is to everyone’s benefit. And if the customer is unable to pay, or it transpires that they shouldn’t have to pay for another reason, finding a solution is key. We know that when small debts are not resolved, they tend to escalate into bigger financial problems over time.
It helps to make debt less of a taboo
However, of all the issues around personal finances, anything labelled as ‘debt’ is still often considered taboo, even when it’s easily resolvable. We are also still seeing circumstances where people are encouraging customers to ignore contact from debt collection agencies in a bid to make the problem ‘go away’.
Such guidance usually comes from unsolicited sources on online forums, and unfortunately, their advice doesn’t help and can result in situations escalating in a way that is detrimental to the customer.
It attends to complaints
CSA members are not afraid of complaints; genuine issues will always be heard, disputes will be taken seriously, and members will do their best to find a resolution.
Our message is a simple one: if you are in debt, and are struggling, then speak to the debt collection agency or debt purchaser concerned, and invariably they will find a way forward, or direct you to one of the debt advice bodies that can act on your behalf. If you have a genuine complaint, speak directly to the agency and, if that agency is one of our members, you can also raise the issue with us if you feel you do not receive a fair outcome.
We are working hard to educate consumers and stakeholders to explain our role as the trade body for the industry, and why working with our members to address debts at an early stage is so important and beneficial to financial wellbeing. By understanding our industry better, we should between us ensure that the vulnerable are looked after, and that those with a genuine complaint have their complaint satisfactorily resolved.
For further information and a list of our members, visit the CSA website.
About the author
Peter Wallwork is chief executive of the Credit Services Association (CSA). He has
30 years’ experience in the financial services industry lending and collecting secured
and unsecured finance, both as creditor and broker.
Peter was elected to the CSA board in 2009 as a non-executive director, and became its full-time, employed CEO in 2010. He is also a trustee of the National Open College Network (NOCN), a charitable awarding organisation, and is an observer on the Lending Standards Board.
Image (top): Getty images
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