Brace for impact: The October forecast for collections

Aug 12, 2020 |

As the days get shorter and the air gets colder, household energy usage sky-rockets while festive spending kicks in, but winter 2020 will be like no other for consumers and the businesses who lend to them. At the end of October, the government furlough and self-employed income schemes are coming to an end, that’s 9.4 million Britons exiting furlough and 2.6 million self-employed Britons exiting the income scheme. With many facing a future without a stable income.

At the same time, payment holidays and deferral schemes are expiring, meaning more consumers than ever before will be looking for affordable payment arrangements, and the only way to get them is by completing an Income and Expenditure(I&E) with all their Creditors. This increased demand from consumers and the need to evidence fair treatment through I&Es will result in longer call times on top of an exponential increase in call volumes.

The perfect storm’s coming. Are you ready?

Gather supplies, batten down the hatches, and brace for impact.

Unlike the sudden impact of Covid at the beginning of March with some Creditors reporting an increase of customer inbounds by 8,000%, we now have the benefit of forewarning. We know this storm is coming - we can see the clouds on the horizon, which means we have time to prepare.

Just as a storm may cut power to your house for days, British consumers are about to be cut off from their livelihoods. Tully's recent report found that 78% of people currently seeking support are on reduced incomes or government furlough schemes, and as more redundancies hit the headlines, many people will lose their regular income completely. According to the Money Charity, most UK households already rely heavily on credit to meet their bills, with an average of £2,595 owed on cards and £60,000 in total debt including mortgages. Additionally, 12.8 million have either no or less than £1,500 in savings. Many will likely fall deeper into debt due to change in circumstances, through no fault of their own.

Income and Expenditure assessments will be more important than ever to ensure and evidence that customers' affordability has been accurately assessed resulting in fair treatment and sustainable payment arrangements, something the FCA will be leading from the front line.

Prepare for the worst.

So how can your business prepare for the perfect collections storm? How can you ensure compliance around affordability, accountability, and best practices?

It won’t be “business as usual”, as you are undoubtedly searching for solutions to combat the storm head-on, not watch as it passes over. But the solutions you seek need to help you solve the biggest challenge - Call Centre Capacity:

  • As more customers are finding themselves in trouble and longer average handle times increase it results in a significant rise in demand for collections teams
  • Agents spend on average between 25 and 45 minutes completing an I&E with a single customer
  • An increase in demand leads to longer customer wait times and an increase in abandon rates
  • Customer ‘guesstimations’ lead to inaccurate I&Es resulting in higher arrangement breakage rates and budget rework
  • An inability to complete I&Es accurately leads to significant customer detriment and regulatory scrutiny

Make sure everyone’s on the same page.

The best way to serve your business is to prepare for the impact on your customers and employees.

You know that your contact centres will be inundated with requests. You also know that 80% of your inbound calls will be for affordability and long-term payment support instead of account management changes. The majority of inbound calls will require I&Es, which results in longer call times, and employees burn out, as the customers wait in endless queues to speak to an agent.

The time it takes to complete an I&E, labour and resources can be stretched even further by simple human error, as customers guesstimate figures or rush through questions, resulting in an inaccurate budget and plan breakages. The time needed to rework those budgets may not be a luxury your company has with incoming volumes at record highs.

Additionally, we can expect the FCA will continue to audit and monitor company compliance with regulations. As customer circumstances change, and with it their affordability, it will likely become more and more difficult to track whether their payment plan is still fair.

So how do we solve for an increase in call volumes, call times, and rushed customers?

You need a self-serve I&E solution... introducing MyBudget.

MyBudget allows customers to complete a budget within minutes instead of hours with anonymity and on their terms. So if life gets in the way, they can pick up where they left off. If they make a mistake, they can fix it. If they don't want to talk to a stranger about their finances, they don't need to.

MyBudget's friendly robot SADIE helps customers along the way by asking the right questions and the right time. Powered by Conversational AI and Open Banking, MyBudget gathers contextual information that Open Banking account information lacks so that every budget is an accurate representation of each customer's personal financial circumstances.

All agents need to do is send customers a link and then they'll be notified when budgets are completed.

The ease of use for both agents and customers speeds up processes and alleviates any bottleneck in contact centres. A 45-minute process for both agents and customers becomes a quick and easy process for the customer alone.

With the right tools, we can weather the storm together, and emerge on the other side ready to face a new day.

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