Investing in Collections Team Training: A Critical Priority for Financial Services

In the heavily regulated world of financial services, we all know that compliance and customer fairness are at the forefront of industry concerns. The Financial Conduct Authority (FCA) place significant emphasis on ensuring firms design and sell financial products responsibly. However, one area that often fails to receive the same level of investment and oversight in firms is debt collection. With the likes of HSBC, TSB and Volkswagen Financial Services incurring fines and enforcement action in the last 12 months in relation to their collection practices, financial institutions must ask themselves: Are we doing enough to train and equip our collections teams to treat customers fairly and ensure good outcomes?

The Role of Collections Teams in Customer Fairness

Firms operating in the consumer credit and insurance sectors rightly focus on regulatory compliance when designing and promoting financial products. However, once a customer falls into financial difficulty, the way in which they are treated is just as crucial to ensuring a fair and positive customer experience. The FCA’s recent fines against major institutions, such as TSB (£10.9m) and HSBC (£6.2m), highlight significant concerns about poor training, ineffective policies, and the failure to properly assess customer circumstances before implementing repayment plans or enforcement actions.

The FCA’s findings revealed that inadequate staff training led to:

• Poorly assessed repayment plans that did not align with customer affordability.
• A lack of probing into customers’ financial circumstances, resulting in inappropriate forbearance measures.
• Disproportionate actions such as default notices and litigation triggered by automated processes, without human oversight.

These failings not only cause direct harm to customers but also expose financial institutions to regulatory penalties, reputational damage, and financial losses.

Addressing the Training Gap in Collections Teams

Despite their critical role, collections teams often receive far less structured training than their counterparts in sales or customer service. While firms invest in ensuring that financial products are compliant at the point of sale, they may overlook the need for equally robust training for the teams handling customers in financial distress. The lack of proper guidance, coaching, and competency frameworks can lead to poor decision-making and non-compliant practices, increasing the risk of regulatory action.

This is where specialist training programmes can bridge the gap. The new City & Guilds Working in Financial Services qualification (Debt Collection route), developed by the Credit Services Association (CSA), is designed to address the very concerns raised by the FCA. This specialist qualification provides structured learning that aligns with FCA expectations, ensuring that collections teams have the knowledge and skills needed to:

• Conduct fair and accurate affordability assessments.
• Recognise and appropriately respond to vulnerable customers.
• Apply proportionate and ethical debt collection practices.
• Ensure compliance with Consumer Duty and regulatory requirements.

A Proactive Approach to Compliance and Customer Outcomes

Regulatory scrutiny of debt collection practices is unlikely to ease any time soon. Firms that fail to adequately train their collections staff will continue to be at risk of fines, reputational damage, and operational inefficiencies. Investing in structured training not only helps financial institutions remain compliant but also ensures better customer outcomes, fostering trust and long-term customer relationships.

By prioritising specialist training and ensuring that collections teams receive the same level of professional development as other departments, firms can demonstrate their commitment to treating customers fairly. The launch of the City & Guilds Working in Financial Services qualification provides a timely opportunity for firms to upskill their collections teams and align their practices with the FCA’s expectations.

Conclusion

The message from recent FCA enforcement actions is clear: financial services firms must ensure their collections teams are as well-trained and competent as those handling product sales and customer service. Investing in high-quality, specialist training is not just a regulatory necessity—it is a strategic move to safeguard customers, protect the firm’s reputation, and foster a culture of fairness and responsibility in financial services.

The question for financial institutions is simple: Can you afford not to invest in your collections teams?