Collecting Debts from Vulnerable Customers
One major issue for many years has been that customers, after taking out a loan, are unable to make the repayment due to many potential reasons. We work with many lenders in obtaining County Court Judgments against debtors, and we would always advise lenders against this course of action when there are obvious difficulties for the borrower to repay their debts.
Over the last few years, it has become increasingly normal for borrowers to enter into Debt Management plans when they are unable to repay the full amount of their debts in the contracted period. These plans allow borrowers to spread the repayments on all of their debts over a period of normally 5 years. There have been many drawbacks to this for lender over and above the long wait to get the money they are owed back. These drawbacks can include:
- Receipt of very low value payments each month. Generally the borrower will attempt to reduce the overall debt and monthly payments tend to be less than £1 in many circumstances;
- Payments tend to be made by cheque which costs the lender to process their own money – sometimes even more than the value of the cheque!
- Keeping track of whether every person in a debt management plan has made the payment for each month is expensive to maintain.
Recently we were introduced to the “CRS Compass” service. This is a service specifically targeted at the management of Vulnerable Customers within a consumer credit lending business to reduce the costs of this element of the business and ensure that the debtors are MANAGED not just allowed to drift.
Credit Resource Solutions have developed Compass to basically be an intermediary between lenders and the Debt Management companies and charities. This will ensure that costs are reduced and a clear management of these problematic customers is in place.
We believe this to be an Innovative way of lenders managing their vulnerable customers and keeping costs under control in this area.