December is an odd month for debt collectors, on the one hand, it’s an expensive month with presents to buy, higher than usual food bills, increased fuel costs and less working days than the rest of the year. However, on the other hand, the debts that credit controllers, collection agencies, legal firms and solicitors are tasked with collecting, are still due and payable with the creditor expecting, perhaps even needing, to receive their payment regardless. According to statistics produced earlier this year by Thinktank, on behalf of the Resolution Foundation, 13 million households - that’s 25%, paid for Christmas last year by borrowing, either by using credit cards, overdrafts, payday or bank loans. It goes without saying that increased indebtedness reduces any available income to repay creditors even further. It is estimated that borrowing will average £685 per household this Christmas and take 24 weeks to repay. Recent news items support this and comments such as: “half of households expect to run up debts this Christmas” are commonplace. More worrying perhaps, is the forecast that interest rates will rise incrementally to 3% by 2018 causing 1.2 million homeowners to spend in excess of half their income on mortgage payments a statistic widely accepted as a sign of over indebtedness and of which, half will have children. So, back to my comment about December being an odd month for debt collection.
The job becomes much harder in the run up to Christmas, with usually regular payers asking for, sometimes even demanding at least one month’s deferral of their agreed repayment…just because it’s Christmas! Collectors who generally get a bad press are now put in a position of potentially being emotionally blackmailed into not doing their actual jobs and letting their clients or employers down, by not collecting money, money that has been forecast as expected and possibly urgently needed to allow the creditor to meet its obligations to its staff and its suppliers. Collectors who persist that repayment terms are met as agreed, are seen as hard-hearted and insensitive to the customer’s needs, but what about the creditors needs? Or the collectors needs? Well basically they have to rank second and third respectively, though that does not denigrate the fact that they exist and are genuine, only that they play second fiddle now.
The Financial Conduct Authority (FCA) is pushing hard to move financial companies away from commission or bonus driven pay toward a more quality driven framework. As with any performance related job, a collector who once was rewarded for money collected, should now be measured against how they perform against certain tasks, what they say, how they say it, and the overall customer experience. However, it’s still a fact that ultimately, their raison d’être is to collect the money owed so what do they do? How do they reach that sweet spot where everyone feels comfortable? Negotiate! Treating customers fairly. Not withstanding that a customer has an obligation to communicate with his or her creditors, and as far as possible, keep them appraised of their circumstances and of any changes affecting their ability to pay their debts. So to punish one for doing that is churlish at best and reckless at worst.
Where a customer feels Christmas is a valid reason to miss a payment completely the collector must handle the situation diplomatically and with care, clearly it is not acceptable to deny a creditor their money when you have made a promise to pay having agreed a reduced repayment plan (which fully accounts for any extenuating circumstances)… but on the other hand, it is Christmas!!! Each case must be treated on its merits and proper negotiation conducted to reach an amicable solution, whether you insist the debt takes priority, agree a deferral, agree a reduced amount or simply make a small increase on subsequent payments to bring the account back into line is down to you do by discussing politely and fairly, either way, at this time of year it is more about HOW you reach agreement not what you finally agree. No one wants to be known as the Grinch do they? Merry Christmas!