Friday, 24 May 2013

Breaking News…the UK is not an island (when it comes to debt!)

This came as a big shock to me after my 37 year residency, but in the same way as no man is an island, I am slowly coming to believe that no country is either!

My wife, who is a solicitor, has said on a number of occasions when I have been trying to persuade her that moving to a new country for a new challenge would be a good idea, "Every country is different with different rules and laws and I would have to totally retrain if I wanted to be a lawyer anywhere other than the UK."  After a bit of research I have come to realise that this is the truth and not just an excuse not to move!

However, as I have engaged with creditors, DCAs and debt purchasers in the UK, Australia, South Africa, the US, Colombia, Spain, Italy and Scandinavia it has become clear to me that this immutable fact for lawyers is not as immutable for the global debt industry, where creditors all across the world are facing the same debt recovery challenges and frustrations:
"We want to be able to segment our portfolio to ensure that the right debt gets to the right strategy and the right supplier at the right price.”
“We want to be able to utilise a broader panel of suppliers to benefit from diverse strengths.”
“We want to be able to change the mix of debt sale and debt recovery based on prevailing market conditions.”
“We want to be able to create a truly competitive environment for our DCAs where we can change the flow of debt to them based on performance quickly and easily.”
“We want to be able to differentiate the treatment of won’t pays from can’t pays.”

This desire to work with best practice and improve the returns on debt and treat customers fairly is normally not achievable because:
  • The analytical resource to determine these answers are all being utilised on the higher profile acquisition, customer management and collections areas;
  • The system that is being used for debt recovery is a badly thought through bolt-on to the collections system and is not flexible enough or functionality rich enough to do what you want it to do; and  
  • Even if the right system and analytical resource could be found, getting IT to prioritise and implement such a system is almost impossible because of larger opportunity items in the higher profile areas.

“We need to know where our debts are at all times.”

Especially with the more manual debt sale processes, files are often cut by analyst and sent via encrypted email to purchasers, but the creditor’s ability to track where the accounts have gone after this initial transaction and who now possesses them is typically non-existent.

“We need visibility of the actions of third parties, be they DCAs or debt purchasers.”

This visibility is often limited or even non-existent because of the inability to capture and interrogate non-standard data from third parties and now regulators are putting increasing pressure on creditors to either fix this or stop using third parties altogether.

So whilst the UK may physically be an island, it appears to me that the debt market is pretty much universal at the highest level. Whilst there are a number of local differences driven by culture, regulation and politics, the main debt recovery challenges are global constants.  The good news is that if there are global challenges then there must be global solutions – you just need to know where to look!

By Garry Evans, Director of International Partnerships, TDX Group


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