UK consumers are currently experiencing a cost-of-living crisis unseen for decades, with petrol prices soaring to record levels in recent weeks and energy costs more than doubling this year.

Inflation is expected to reach 7% in 2022 according to the latest Bank of England inflation report. With wage inflation failing to keep pace and an uptick in redundancies following the end of the Covid furlough scheme, many face severe financial difficulties. Indeed, many are already taking on unsecured debt in order to pay household bills according to Bank of England figures.

It’s predicted that millions of people will struggle to repay mortgages, loans, credit cards and debts, instead prioritising bills such as Council Tax, or in the worst cases, simply ensuring they can put food on the table.

Credit institutions including banks, building societies, credit card companies and utilities would be wise to start preparing now. We’re anticipating a surge in the average percentage of customers in arrears, from the typical 3-4%, to around 12-15%.

What help is available for consumers?

There are schemes in place to help consumers manage their financial difficulties, like Breathing Space introduced in May 2021. This entails a 60-day freeze of interest, fees, and charges on debts, protecting customers against any enforcement action.

Despite this 60-day rebate, Collections and Recovery teams will undoubtedly be under pressure to work with consumers to help reprioritise their finances and work out a way forward that best suits their individual circumstances.

Frontline staff will need to have experience of sensitively handling individuals in financial difficulty and knowing how to help them navigate schemes such as Breathing Space, balanced with strong negotiation skills to work out a repayment plan that, ultimately, works for all parties.

Lack of experienced personnel

It’s fair to say that there hasn’t been this level of financial strain on consumers since the recovery from the 2008 financial crisis. As a result, there’s been limited investment in tools and training in this area. Many Collections and Recovery teams simply haven’t dealt with consumer debt on this scale before.

The staff with experience of the 2008 financial crash have by and large moved on from customer facing roles, leaving less-experienced agents to handle difficult conversations with customers in significant financial distress. At the same time, the Great Resignation has hit almost every industry, further impacting on the shortage of well-trained staff handling customer calls and cases.

Many organisations will be facing a staggering increase in calls from customers in financial difficulty or classed as vulnerable, while already struggling with understaffed teams operating at maximum capacity.

Resourcing for the storm ahead

My advice would be to get ahead of this perfect storm by looking at how you’re going to increase the capacity of your Collections and Recovery teams. The volume of staff required to meet this anticipated demand is significant. Above all you should be looking for experience and investing in hands-on training – few qualifications can better prepare you for difficult conversations with potentially vulnerable customers than real-world experience.

What’s more, increased consumer demand will inevitably mean increased regulatory scrutiny. Forward-thinking businesses are already starting to invest in experienced QA staff and cutting-edge technology to level up their compliance monitoring capability.

Start the process of augmenting your team to handle and review customer calls now so when call volumes inevitably start to rise, you can provide the right level of customer support and compliance straight off the bat.

Mark Hover is Group Chief Commercial Officer at TCC and Recordsure.

How TCC can help
At TCC, we can help you find, select and vet agents with the right experience to manage individual customers and negotiate them onto long-term repayment plans.

Want to learn more about our resourcing solutions? Get in touch with us today.