Debt collection restrictions in the Covid era – what can electrical firms do?
Posted by: electime 7th September 2020
By Jayne Gardner, partner and head of Debt Recovery at Corclaim Debt Recovery & Asset Finance
Figures recently released by Stepchange estimated that 2.8 million individuals have fallen into debt since lockdown, with at least 1.2 million cases relating to utility arrears.
That in addition to recent figures from the Registry Trust, which collects information on behalf of the Ministry of Justice, which show that the number of county court judgments (CCJ’s) registered against individuals in England and Wales has risen by 3 per cent (£30,130.00) to 1.15 million in 2019, paints a bleak picture for both people falling further into debt and the creditors who are owed money.
All creditors, particularly utility companies are focussing on how they can address their growing debt books, and collect their debts while still giving consideration to the well-being of their vulnerable customers.
One of the main items for consideration is that debt problems usually go hand in hand with other issues. It is a well-used adage that debt collection is now an extension of customer service, and where vulnerability is concerned that is certainly true, but taking this stance can also result in the best outcome.
Vulnerable customers need empathy and support. You also need to understand as much as you can about their vulnerability. Vulnerability can be a temporary situation, and if you can work with your customer through their difficult times, they are likely to be more mindful of repaying the money they owe your company, when that time has passed.
Whether the staff are your own, or that of a third party agency, you should take steps to ensure that the staff have the necessary training to give them the skills and capability to treat the customer fairly, which may involve seeking information about the customers’ vulnerabilities. This is of course important to enable all vulnerable customers to be offered the correct advice, for collection activity to be suspended or ceased entirely, and to ensure any steps taken do not make the individuals situation worse.
Vulnerability encompasses a number of circumstances all of which require different handling. Your staff should try and put themselves in the customers shoes – how would you feel if you were in their situation? If you had suffered a recent bereavement, surely all you would hope is that the person on the other end of the phone took the time to listen to you, empathise with you, and give you a reasonable amount of time to deal with your situation. Then and only then, the customer is likely to be ready to address the matter at hand, and will of course feel more positive towards your company if their last interaction was positive. This is then likely to result in a good outcome for your business in recovering the amount due, and no negative press or feedback on social media.
If you were diagnosed with a long term or terminal illness, you would want to speak to someone who took the time to talk to you, and understand that you are not able to deal with the situation. Does the customer have a friend or relative that they can authorise you to speak to on their behalf? For example, someone who is able to deal with the matter from a more practical perspective. If a customer is seriously ill during the winter months, you would want to support the customer, rather than risk them not heating their home properly and exacerbating their illness.
While legally, subject to your specific terms of business, a company may of course pursue recovery of unpaid debts, you should consider the effect on your reputation, which is likely to impact on profits with today’s focus on social media.
There were also other factors to consider such as your customers ability to pay and the restrictions put in place by the government during lockdown. While the county courts would still issue money claims, until the 23rdAugust, Bailiffs and High Court Enforcement officers were unable to attend residential properties to enforce Warrants or Writs of Control. Therefore creditors who did obtain a Judgment would struggle to enforce it. It was also not possible to issue possession claims, or pursue Charging orders over properties throughout the lockdown period.
What these last few months have shown is that whether or not your customer is vulnerable, the focus should be on contact and engagement. Make contact with your customer as soon as possible, work with them, listen to them, and for the most part, your customer will then work with you to resolve matters.
The vast majority of people in debt want help and support. If you employ the right credit control or collection staff, they will engage with the customer. In these uncertain times, cash remains king and prompt contact could dramatically improve your ability to collect your debt.
