Utility Week

UTILITY Week 16th October 2015

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UTILITY WEEK | 16TH - 22ND OCTOBER 2015 | 27 Customers Market view A ccording to a 2012 report from Defra, the water industry wrote off £328 mil- lion of household debt in 2010-11 – an increase of £168 million on the previous year. Bad debt costs the average water con- sumer £15 a year, and we all know that cut- ting off water supply to customers who do not pay their bills is neither legal nor ethical – therefore we must find effective solutions to prompt customers in arrears to pay. Worryingly, a 2014 survey by the Debt Advisory Service found that almost a fih of UK adults have had to rely on a credit card or loan to pay their utility bills. Clearly, more effective action is needed to ensure custom- ers who are able to pay their bills do so, and efficient strategies and sensible payment plans should be deployed to help customers who might struggle to pay. So what does ethical debt collection look like and how have practices evolved over the past decade? Thankfully, the way in which debt is being collected in the utilities sector has evolved. In the past, many debt collection agencies (DCAs) focused significantly less on areas that are today seen as critical to a fair, regulated and considerate approach to con- sumers who are struggling to pay. From my experience, there are five key areas in which the field has changed. Improved standards When attempting to build new relation- ships with utility suppliers, there are now a number of minimum requirements that a DCA must demonstrate. Procurement profes- sionals and collections managers are now looking for agencies that can demonstrate professionalism, experience and knowledge of the industry. There are now a number of accreditations – including ISO, PCI DSS and Investors In People – that are widely regarded as the min- imum requirements. Previously DCAs were only required to provide clients with a list of policy documents and accreditation cer- tificates, but in recent times there has been a shi towards assessing the overall culture of a DCA. Tighter governance and regulation Regulatory bodies such as the Credit Ser- vices Association, the body in the UK for companies active in debt collection, and the Financial Conduct Authority, which ensures consumers are getting a fair deal in the financial markets, are in part responsible for a big shi in the industry. Although not mandatory, most collection agencies usually follow these bodies' guidelines. For DCAs, embracing the development of their compliance team, alongside the guide- lines and best practice of regulatory bod- ies, is essential for maintenance of industry standards – especially as consumer debt management continues to fall under the spotlight of regulators and industry alike. Customer awareness Significant improvements have been made in this area, with both DCAs and utility com- panies more focused on, and sympathetic towards, consumers' predicaments and financial positions. The old labels of "can't pay" and "won't pay" didn't take account of the various groups and individuals in those categories. "Can't pay" fails to recog- nise major life events such as suffering from a terminal illness, bereavement or loss of a job – which need to be better understood and fall outside of the mainstream collection cycle. "Won't pay" doesn't acknowledge the possibility that DCAs and suppliers might have to review their own procedures. Has the customer been billed correctly? Is there a dis- pute on the account? Is the correct informa- tion being provided to them in a manner that is suitable for them? These labels are now being broken down as DCAs recognise that a single strategy approach to collections is not conductive to treating customers fairly, nor maximising collections. In addition, protection for vulnerable customers – because of disability or mental health issues for example – affordability, and treating customers fairly are all topics that must now rank highly on the priority list for any DCA. Thankfully, these aspects are widely acknowledged today as the key to fairly recovering debt. Simpler payment methods Historically, a letter would be sent to the cus- tomer by post, and a telephone call would be made, before any further collection action would be taken by an agency. In contrast, collection agencies can now use a multi-fac- eted approach to building up two-way com- munications with customers. Alongside targeted letters and sophisti- cated outbound dialing strategies, tailored SMS messages, emails, doorstep visits, extended opening hours and the ability to pay directly using a credit or debit card, or online, are just some of the methods of con- tact that can be used to make the collection process simpler. This shi not only gives consumers more choice and encourages them to make con- tact, it also increases opportunities to con- tact them – both of which help to enhance collection rates for clients. A smarter approach An increasingly digitally focused world means we now have a myriad of ways in which we can simplify and enhance work streams. Whereas at one stage all of a DCA's work was paper based, bundled into large envelopes and sent all around the country to field operations staff, we now have the ability to manage this digitally. Today, data transfer between head office and field agents is made simple and efficient with the use of handheld technology provided for each agent. Using elements such as SFTP serv- ers facilitates secure, robust transfer of data along regularly audited channels. Clearly, the debt collection industry is a long way ahead of where it was, in every area of service provision, from both a customer and a client perspective. Working practices have been streamlined, rationalised, and legislated. And perhaps most importantly, the customer is now always at the heart of debt collection strategies – all of which can only be good for utility companies and their consumers. Lloyd Birkhead, managing director, Grosvenor Services Group (a subsidiary of Echo Managed Services) The new face of debt recovery Customer debt in the utilities sector is still a huge problem, but the effects of preventative measures and behavioural change are starting to be seen, says Lloyd Birkhead.

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