Beyond I&E: Managing Affordability in a Crisis

Introduction

The Standard Financial Statement has been a valuable addition to the debt collection process since it launched in 2017. Designed to bring greater consistency to the way organisations assess people’s finances when they are in debt, the SFS lays the foundations for fair and appropriate outcomes for customers based on their income and expenditure at a particular point in time.

However, as Collections teams know only too well, the SFS is just the start of the affordability assessment process. Once the form is completed, the hard work really begins.

During the assessment procedure, organisations are mindful of their obligations under CONC 7 and are looking toward the new FCA Consumer Duty due out in July. They aim to achieve:

• Quick and clear outcomes for customers
• Proven consistency and fairness
• Efficient use of agents’ and customers’ time

These goals exist within an economic climate where the volume of customers who need help is increasing, the number of customers in vulnerable circumstances (particularly financial vulnerability) is rising, and where volatile global events mean customer circumstances will change and change again over the coming year and beyond.

This leads to a number of pressures:

• Managing inbound engagement
• Assessing and re-assessing the customer’s ability to pay
• Maintaining the paying habit
• Making it easy for the customer
• Ensuring actions are based on accurate information

SFS completed; what next?

If economic forecasts are accurate, the number of Income and Expenditure assessment requests will rise exponentially as financial insecurity increases. Fortunately. the associated administration can be automated, but what does automation mean, and what impact can it have on operational capacity, customer service and baseline costs?

In many cases, ‘automation’ of the SFS is no more than a stand-alone information capture form filled in by customers. This represents a small time saving but ultimately ends in a process cliff edge and falls considerably short of what can be delivered. If an agent is required to manually complete the procedure, it’s less than half the job done.

By deploying Smart Affordability Decisioning (organised to each organisation’s parameters, strategies and policies), the administration of the SFS can be fully automated, generating consistently fair and appropriate outcomes without being dependent on manual agent activity. All of the available data sources can be instantaneously evaluated, and all the known values can be used to produce the most appropriate action in accordance with pre-configured rules. This can be achieved in a fraction of the time it would take to manually assess all the pertinent data and reach a decision – during which delay, the customer is kept waiting.

Truly personalised channel-agnostic journeys

Once an outcome has been acquired, it is conveyed to the customer via their preferred communication channel. This may be the offer of a particular arrangement type or a period of forbearance. Customers may be identified as eligible for sector-specific help such as social tariffs (helping to increase take-up), or, where the customer has no foreseeable affordability, they can be directed to a debt advice body or income maximisation service for specialist help.

In the latter case, the customer’s income and expenditure can be automatically rechecked over an appropriate time frame, triggering the SFS to be unobtrusively sent out again.

In a digital self-service journey, exactly the same decisioning is deployed as in an agent-led journey (ensuring complete consistency across all channels). Once an Income and Expenditure assessment has been completed, the same integral decisioning engine will factor the available outcomes into the best next steps and present them to the customer in real-time. This personalisation means that each digital journey is individualised and relevant, adapting to new information at every stage and taking no more of their time or effort than is necessary to achieve the most appropriate outcome, every time.

In every case, customer circumstances can be checked automatically over a designated period to capture any improvement in the customer’s ability to pay or any deterioration in the customer’s circumstances that needs to be addressed.

The real benefits: proven consistency and fairness

The time saving offered by advanced automation is vast (particularly when scarcity of agents and wage inflation are disrupting recruitment) but the true benefit is timely, relevant and appropriate engagement every time, for every customer.

With regulators across all sectors focusing heavily on demonstrable consistency, organisations can be certain that their own internal policies are being administered fairly and can refer to an immutable audit trail to prove that each customer has received unbiased and consistent treatment across every channel. To deliver exemplary service for customers at a time when circumstances are chaotic or unpredictable and at a time when new staff are extremely hard to come by, collections teams will be seeking to take full advantage of the operational advantages available through intelligent automation. If you’re still manually administering I&E, will you have the capacity to get through the cost of living squeeze with your customer service reputation intact?

About the author: Martin Aldridge, Solutions Consultant

Martin has extensive experience in solution consulting for collections and recoveries organisations, having spent many years working with Banks, Financial Services, Telcos and Utilities across 25 countries. His key focus, apart from advocating clarity of requirements, is driving maximum value for the organisation whilst retaining and enhancing the customer experience at the same time.

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