During 2013, the Lending Standards Board (LSB) completed a review of how its subscribers treated customers in financial difficulties. This included assessments of eight debt collection agencies (DCAs) used by subscribers for outsourced collections activity and debt sale. Of the eight reviews conducted, four were rated green, three amber and one red.
The LSB identified some good working practices and customers being handled sympathetically and positively, which resulted in good customer outcomes. There were, however, a number of code breaches and weaknesses identified.
In light of the results, a further round of monitoring was initiated. The LSB’s latest report sets out the outcome of this. The nine reviews resulted in one green, six amber and two red ratings. Whilst, on the face of it, these are worse results than those in 2013, the LSB says that the results need to be taken in context in terms of the approach they took to the review and the nature of some of the more significant findings.
The LSB found that:
- At eight of the subscribers visited, in the majority of cases, customers were treated sympathetically and positively, with little evidence of undue pressure being placed on the customer to agree to a plan that they could not afford.
- Whilst subscribers were fully compliant in some areas, there were still failures in others, particularly:
- Completion of affordability assessments
- Questioning of customers in financial difficulty, listening to the information and responding to their circumstances appropriately
- The adequacy of training of agents to deal with customers in financial difficulty
- Record keeping, and reference to previous discussions and file notes
- Oversight of third party agents or the adequacy of the due diligence before selling debt
- Over-reliance on a scripted process which resulted in key information being missed and impacted the ability of staff to identify precisely the customer’s circumstances, which consequently led to the wrong course of action being taken.
Some subscribers’ procedures relating to the oversight exercised over its own in-house collection teams and that of its third party agents were good, but others were weak.
The LSB also observed many areas of good practice in relation to listening skills, call calibration, call notes, contact strategies, training, incentive schemes and quality management framework.
As breaches were identified during the themed review, the LSB has stated that it will be necessary to carry out a round of follow up work at the subscribers rated amber and red. These visits are to take place between February and June 2015.
A copy of the LSB’s full report can be found here.