By Nic Marshall, CEO, ResQ
Research by the debt charity Stepchange has found that the number of people who are in severe debt in the UK has risen to 1.2 million, nearly doubling since March of this year. A further three million people are at risk of falling into arrears after taking on extra loans.
These circumstances are unprecedented and require a different, highly responsible approach to debt management. This new approach should be anchored in a considered and flexible strategy that takes into account the precarious situation many people have found themselves in.
Redundancies at all salary levels have become a major feature of the current economic landscape and even the previously affluent, relatively speaking, are finding themselves in a difficult financial position, possibly for the first time in their lives.
This shift has rendered the old debt management frameworks obsolete. Truly customer-centric organisations will recognise the pandemic-induced needs and expectations, and put the customer at the heart of the new debt management approach.
But while this exercise is often managed within organisations, it is recommended to seek counsel from the wider support network, such as debt management agencies and outsourcers. Such a collaboration will ensure that the new principles, practices and processes reflect the ‘new normal’ and take into consideration changing customer profiles.
The role of outsourcing
External partners can play an important role in putting in place appropriate communication and training frameworks for responsible debt management, including comprehensive planning and preparation. They can also provide counsel in relation to processes, tools and techniques, provide trainers, supervisory resources and frontline resources, develop templates and set up analytics/reporting.
It is recommended to find a debt management partner who can demonstrate brand and cultural alignment and is able to appreciate and understand your company values. Their expertise can also be invaluable in enhancing your reputation during a uniquely challenging time.
Quality and compliance
Due to the risks to individuals and businesses, it is important to ensure debt management frameworks and practices are regularly reviewed for compliance with external regulatory
frameworks. Outsourcing partners can ensure internal policies and processes are reviewed and measured appropriately to support a robust approach.
In a time when the old ‘debt recovery’ transactional paradigm is very much outdated, external partners can help move debt management from being a by-product of the sales cycle to very much a core part of customer care. Such a strategic step change will increase the likelihood of reaching an optimum outcome for both customers and organisations in the long term.
ResQ’s ‘Debt Management in a New Debt Era’ whitepaper delves into the challenges associated with changing customer needs during the pandemic, and provides guidance on some of the key areas of debt management. To download the whitepaper, click here.