Securing the best outcomes for creditors and clients is something we all work hard to achieve. A pioneering new creditor tool kit has just been launched to help promote consistency of customer support and best practice across the sector.
Created by the Money Advice Service (MAS) and leading external stakeholders, ‘Working Collaboratively with Debt Advice Agencies – a strategic toolkit for creditors’ is now available to reference and use.
The toolkit offers ‘how to’ operational support in several important areas including; customer affordability, debt advice referral strategies and engagement and partnerships. It recognises the commercial considerations of creditors and captures the organisational benefits of debt advice interventions.
Here MAS Sector Engagement Manager, Kevin Shaw, explains how the toolkit came about – and why its introduction is such a significant step for the industry. He says:
“We are an independent service set up by government. And one of our roles is the strategic co-ordination of the debt advice sector.
Our stakeholders have called for us to deliver work which influences ‘more consistent creditor support’ when people experience financial difficulty.
So, we developed a set of principles for the project. Customers expect to be treated fairly by all types of creditors during financial difficulty. Debt advice agencies want confidence that all creditors are ‘operating by the same rules’. Finally, creditors want recognition of their obligations to collect debts and some measurements of what ‘good practice support’ looks like.
Treatment of customers can vary by creditor and with new creditors entering the market, including challenger banks and digital lenders, having a source of consistent guidance and advice felt more important than ever.
We have used our sector coordination role to bring creditors, trade bodies, debt advice agencies and others together in several cross-sector workshops, to share ideas and challenges.
From the beginning, the creation of the tool kit has been a process of collaboration. We have always seen a willingness from the industry to develop and do things better.
Creditors now have a daily working relationship with the debt advice sector. We wanted to share their mutual expertise and knowledge in a manual that would influence the way creditors approach arrears and collections and to articulate clearly what good practice engagement with the debt advice sector looks like.
The conclusion from our workshops suggested that there are seven steps for creditors for improved collaboration with debt advice agencies. These are:
1. Debt advice interventions – creditors should track the benefits debt advice brings to customers, as well as their ability to collect arrears payments.
2. Customer affordability – creditors should apply the Standard Financial Statement (SFS) spending guidelines or equivalent industry guidance when agreeing affordable repayments.
3. Debt advice referral strategies – creditors can use this toolkit to review all customer channels and help appropriate customers to easily access independent debt advice.
4. Creditor oversight of referral partners – creditors want to have oversight of what happens to customers post debt advice referral. Use this toolkit to agree an approach with debt advice referral partners.
5. Engagement & partnerships – creditors have day-to-day contact with debt advice agencies. We provide guidance on getting the most from the relationship.
6. Target specific customer cohorts for debt advice intervention – we share some examples and case studies of innovative partnership working with debt advice agencies.
7. Align to the Money Advice Service ‘supportive creditor standards’ – we have summarised the difference between ‘Minimum standards’, ‘Good practice support’ and ‘Going above and beyond’.
Stakeholders were consulted throughout the drafting process – with their feedback informing the final document. The finished tool kit was published on 5 July 2017 and we are keen to track its use and influence.
We have an ambitious engagement programme to embed its use and are exploring ways creditors can commit to examining their collections approach and working towards the ‘supportive creditor standards’ that we have included.
This broad creditor resource is only the first edition and we hope it will evolve alongside the industry, reflecting ongoing innovations in processes and technology.
We are also committed to delivering resources for specific creditor types and are currently in planning discussions with stakeholders to facilitate workshops in partnership with local authorities and central government.
As the toolkit develops, we will be happy to report back on how it is changing and being used. Until then you can find out more and access the tool kit here: https://www.moneyadviceservice.org.uk/en/corporate/publications
Please note UKAR does not directly endorse the contributors. The views expressed in this article are those of the contributors and do not necessarily reflect those of UKAR.