Collections and Arrears in a Post Covid-19 World
Throughout spring 2020 the UK government, FCA and Bank of England announced a raft of measures to protect jobs and incomes during lockdown. As lockdown eases, but recession approaches, we will continue to see the impact for years and decades to come.
With mortgage payment holidays ending, and repayments restarting on other loans, there will be increased pressure on lenders to make collections, and carefully manage arrears, in a fair, compliant and ethical manner.
New challenges facing financial services
Such unprecedented times have driven a considerable amount of change across financial services, with lenders having to adapt and evolve. Not only do they need to collect revenue from customers, they can’t at any time forget or neglect their TCF obligations. Even at this time, protecting and supporting vulnerable customers is still critical.
Here we outline some of the key challenges lenders are facing as they balance operational demand with customer support.
Four customer types
We predict there to be four different types of customer following the lockdown measures:
- The Uncertain
- The Curtailed
- The Troubled
- The Fortuitous
For lenders to be able to provide the best service for their customers, they will need to have a solid understanding of the very different needs of these customer segments, and create customer experience and journeys that support those needs.
As the economic impact of the pandemic is realised, lenders will need to apply appropriate forbearance to obtain good customer outcomes, even while experiencing huge increases in demand for services.
Here we explore the four customer types, and how lenders can continue to provide good levels of customer support, especially for those most in need.