Supporting customers in crisis – Reflections from StepChange

Josh Marlow 28 Feb 2024
Written by Josh Marlow
Financial Services Debt
Broken umbrella blown over onto the sand on a beach.

Customer care was the key theme when hosting our recent session with Vanessa Northam – Head of Charity Development at StepChange Debt Charity.

Comparing debt trends in Financial Services and Energy, we discussed how best practice can be shared across each industry, to deliver good outcomes for customers.

Our reflections on this guidance, and the key actions for FS firms, are explored below.

Wider breadth of support in FS – Proactivity remains key

An immediate contrast between these industries lies in the breadth of support available, particularly relating to forbearance solutions, with Financial Services having significantly more options at their disposal.

While this is nothing new, it does reiterate the value of being proactive with customers.

Early recognition of financial difficulty can inform the use of internal forbearance and payment plan offerings and help identify the need for referrals to debt advice earlier, thus enabling your customers to get holistic support with all their debt and access the government-led Debt Respite Scheme (or ‘Breathing Space’), which StepChange played a key role in launching.

Energy providers are more limited in their offerings, which is a contributor to the significant amounts of ‘bad debt’ in the industry. This limitation stems from the restrictions applied to energy suppliers when managing customer debt – a key difference from FS being the inability to stop the supply of credit for an indebted customer.

Typically, customers are more engaged with their providers of credit, than with their energy supplier. As a result, customers have a stronger desire to facilitate this engagement and maintain access to their line of credit, naturally being more receptive to available support solutions.

Our article on enhancing your pre-delinquency strategy offers practical guidance on this topic, which you can revisit here.

Additionally, for a recent example of how we utilised Machine Learning techniques to predict and prevent delinquency with a large energy retailer, click here.

Skilled agents are driving better collections conversations

Within FS, customers are often trying to manage multiple debts at once, and advice can play a key role in helping to consolidate these debts, and/or educating customers on how to manage them.

Compared with energy, Vanessa highlighted that collections agents in FS are currently more skilled in their approach, holding a better understanding of the support that debt advice can provide for customers. Because of this, they’re typically more adept at tailoring their referrals, and offering practical guidance at the right time.

From our own experience, the most effective collections conversations happen when firms invest in fully understanding the individual financial situation of each customer, and in turn, the customer feels cared for and valued. Skills that enable this include:

  • Call flow management - Agents are able to control the flow of a conversation to truly understand the customer situation, without it feeling robotic or scripted
  • Trust and integrity – If the customer doesn’t believe the agent has their best interests at heart, they may be reluctant to share all the necessary information, preventing the right solution from being offered
  • Seeing the bigger picture – Agents understand what happened in the past to lead to the current situation, what the current situation truly looks like, and how this may change in the future

To better equip collections agents in providing holistic customer support, firms should consider implementing:

  • System integrated workflow to aid conversations and reduce errors
  • Principle based process design to cater for all situations
  • Appropriate governance and management oversight, providing support to agents in real time when required
  • Training and development (listening, empathy, identifying vulnerability) to enhance agent skillset
  • Early identification techniques to facilitate understanding of the customer situation
  • Proactive engagement through case study modelling (person ‘X’ was struggling with ‘Y’ – here’s how we helped) 

Selling debt can enhance customer care, when managed correctly

Within the energy sector, opportunities to sell consumer debt only really exist for ‘final’ payments, with suppliers unable to maintain an active supply and sell a customer’s debt.

Conversely, FS companies can utilise debt sale much earlier in the process as a source of recovery, and a means of delivering enhanced support for customers in financial difficulty. Companies purchasing debt are able to invest in technology, and are experts in supporting customers to engage with them, to achieve positive outcomes.

In our experience, firms may avoid selling debt due to concerns around:

  • Reputational damage
  • Missed opportunity by selling for ‘pennies on the dollar’
  • Fair treatment of customers post-sale

Our involvement in these transactions means we’re able to help alleviate these concerns, supporting firms by:

  • Conducting feasibility studies, establishing which customer accounts are appropriate for sale and building the business case to do so
  • Providing analysis to determine the fair value for each segment of customers
  • Setting up NDAs and supporting with purchaser due diligence to ensure customers are treated fairly
  • Assessing reputational risk to prevent any detrimental brand impacts
  • Ensuring operational readiness internally, including comms management and customer query support
  • Managing the sale, ensuring progress is smooth and achieved within the timeframe expected

In our energy practice, we recently helped a large B2C supplier to understand the potential reputational impact of a debt sale, informing their decision on whether to proceed with the process.

We conducted a feasibility study, identifying ~£50m of appropriate customer debt for sale, presenting an expected valuation and risk-level for each of the available purchasers. Our debt team also held reputational risk workshops with key stakeholders in the business.

If you’d like to know more about how our debt expertise can benefit you, whether relating to collections skills or the sale of debt, contact Josh Marlow.

Josh Marlow

Senior Consultant

Josh specialises in Lean Transformation, helping clients to achieve Operational Excellence by optimising processes and improving customer journeys.

View Profile