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The Credit Services Association (CSA)
Blog: Treating Customers Fairly (TCF) in the debt collection sector in 2016 – how do we improve customer outcomes?
Leigh Berkley is President of the Credit Services Association (CSA) and Director of External Affairs & Development at Arrow Global.
Credit Today’s Collections, Debt Sale & Purchase Conference 2015 (see @CreditTodayUK #cdpsconf on Twitter) took place in Manchester last month and I chaired a packed agenda on regulation, innovation and customer engagement. As a sector, we have a lot of big challenges to face when it comes to authorisation and supervision by our still relatively new regulator, the Financial Conduct Authority (FCA). But looking ahead to 2016, the key message was that we want to continue working to go further than compliance to a model that is genuinely focused on customer outcomes.
What is the difference between Treating Customers Fairly (TCF) and a focus on customer outcomes?
TCF is an industry principle set out by our regulator to which we must all comply. The FCA outlines six outcomes for consumers that we are expected to deliver, including the confidence that they are dealing with firms where the fair treatment of customers is central to the corporate culture. How we deliver these outcomes and measure compliance with this is complex and can be interpreted in different ways. The temptation is to adopt a processes and systems-led approach that covers all bases to ensure compliance. But it’s not a ‘tick box’ exercise. At the conference we heard from the likes of Aviva and Santander about how they are truly embedding customer outcomes into their corporate culture and learnt that flexibility and versatility, rather than rigour and control, were the keys to ensuring that we do right by each and every individual customer.
Tas Bhamji of Santander made the point that compliance can make us overly cautious, which may not always be good for the customer. Of course we must be compliant, but compliance automatically comes as a result of treating every customer and every individual case as unique. That means abandoning old-style scripting on the phones, and providing better training and equipping staff to deliver excellent customer service, something that the Credit Services Association (CSA) as the UK trade body for the debt collection sector, is working to do throughout its cutting edge learning and development programmes.
We also heard from Jan Steiger, Executive Director of trade association DBA International about the ‘regulatory Olympics’ still going on in the US, with regulators all trying to look tougher than the rest, and we were grateful at the more listen-and-learn approach of the FCA here in the UK.
What are we doing to understand and support vulnerable customers?
The conference started with a fascinating update from Louise Marfany of the FCA who took us through the regulator’s priorities for our industry in 2016. She talked about vulnerability and laid down some clear signposts that the industry will need to continue working together on this important social issue.
During the panel session on vulnerability later in the day, Joanna Elson of the Money Advice Trust talked about the ‘Tell Us Once’ approach to simplify how we define vulnerability, and all agreed that, to quote Joanna, “It’s all about excellent customer service!” If we deal well with every customer, we should automatically spot and deal well with vulnerability, not as part of compliance, but as part of our approach to customer service. Caroline Siarkiewicz of the Money Advice Service talked convincingly about engagement and the emotional barriers of being in debt, which could often lead to vulnerability, and David Steele of Age UK said simply “One size does not fit all.”
At the heart of vulnerability are issues of affordability and creditworthiness and the FCA is working to ensure that debt purchasers carry out adequate due diligence. The CSA is currently working with debt purchasers to put together best practice guidance in this area, which we hope to put to the FCA before Christmas.
Andrew Smith of Debt Resolution Forum had a slightly different slant to the rest on TCF and vulnerability. He pointed out that Local Authorities often create vulnerability by their treatment of those in social housing, and emphasised the additional cost of dealing with vulnerable customers. Meanwhile David Steele of Age UK highlighted the difference between situational, inherent and structural vulnerability, giving an example of the latter where insurance companies put premiums up each year for older people. Andrew thought vulnerability was often episodic rather than long term, but Caroline said that 83% of those in financial difficulty and vulnerability still want to repay their debts.
Is putting the customer first at odds with business outcomes?
No. Talks and panel discussions throughout the day acknowledged that a sole focus on doing what’s right for the customer results in better business outcomes – greater efficiency, greater capability and more opportunities to innovate and develop with the ever-changing landscape. Listening and responding to consumers is the only way that we can make our businesses sustainable and successful.
In the final panel of the day on reputational risk management, we were reminded that a reputation can take years to build but only a day to destroy, and that we have a long way to go to build consumer confidence in what we do. This is something that we must be committed to doing, rather than just saying, in 2016 and beyond, using tools like social media to listen and learn.
In summary, I thought the day portrayed our industry as one which is firmly committed to doing the right thing, and that this commitment is showing through in our dealings with Government and the regulators, the debt advice sector, and of course our customers. As we go through FCA authorisation and the other challenges ahead, we will however need to keep in mind the need for innovation, and avoid slavishly following the rules where this does not produce the right outcome for the customer. At the end of the day, it’s all about excellent customer service!