An anomaly in the consumer credit complaints numbers is that fact that debt collection firms have seen a 35% drop in complaints.
This is likely due to the many initiatives rolled out by regulators and government around providing greater forbearance in collections activities, and a more understanding approach to financial hardship and debt resolution during the . This may have led to fewer debts being passed onto debt collection agencies in the first place, as well as all firms showing greater tolerance in their approach to collections activities.
Is this a cultural shift that’s here to stay?
With financial services firms taking a more personal, proactive and considerate approach to dealing with consumers, particularly vulnerable customers, during the pandemic, it is no surprise that complaints have reduced. The sense of “we’ll get through this together”, combined with the introduction of many support schemes such as payment holidays, has turned what has sometimes been a somewhat antagonistic relationship into something much more friendly.
This change in approach has not just been limited to consumer credit and debt management firms as the tone of customer communications from all financial services companies has undergone a significant shift in since the first lock-down back in March 2020.
But is this change a short term “cease fire” or a long-term shift that will last once the pandemic (finally) ends? With vaccines being rolled out, people are looking to an end in sight and return to our “old normal” rather than the “new normal” we adapted to in 2020. However, many companies could discover that this shift in tone and approach may be of mutual benefit in customer service long term with more loyal customers who engage with them more positively.
Looking ahead to 2021
As we all eagerly put 2020 behind us, what trends are we likely to see in 2021 and future FCA reports? Our team previews the challenges financial services firms could be facing this year.
- Payment Holidays – These have been a financial lifeline for many people throughout 2020, but many consumers may have also taken these out unnecessarily. The fact that payment holidays were applied to many products for the first time, and the speed with which they were rolled out and communicated, could open firms up to remediation claims once the long-term impact to the consumer becomes clear.
- Vulnerable Customers – The criteria for identifying vulnerable customers has changed dramatically throughout the pandemic, as has the number of people suffering financial vulnerability. With the economic impact of COVID-19 likely to be felt far into 2021 and beyond, firms are going to have to rethink the resources they devote to dealing with many different types of vulnerable customers.
- Consumer Credit – As the increase in financial vulnerability amongst consumers combines with more stringent lending regulations in this sector, how do these firms adapt both their lending process and debt collection activities?