Debt collection: the school of hard knocks

When hard man and ex-professional footballer Vinnie Jones played ‘Big Chris’, a porn magnate’s brutal debt collector, in Guy Ritchie’s film Lock, Stock and Two Smoking Barrels, he cleverly exploited the public’s widespread detestation of a job which appears to opt for terror above training.

In fact, of the 25,000 people already employed in debt collection work – a figure that is set to rise fast as the recession takes hold, according to the Credit Service Association (CSA) – at least 67% are women, many of them hired specifically to knock on doors.

Nevertheless, at a time when the demand for proficient collectors is soaring – CSA members are instructed to chase more than £15bn of debt annually, most of it via the telephone – the profession’s negative image is having a serious impact on both recruitment and retention, says CSA director of marketing Sean Feast.

“There are many reports of debt collection agencies having to abandon opening schedules because they find that all the experienced collectors available to them are already working for another firm on the same patch, even though there is lucrative work going begging,” he says.

In the area of commercial debt – where the debtor is an insolvent business, rather than a strapped-for-cash householder – the problem of recruitment is even worse, says Rebecca Goodger, operations and recruitment director at Sovereign Credit Management.

“There are training schemes out there, but they’re mostly for the consumer sector,” she says. “Our collectors need to be far more proactive and meet far more rigorous targets when it comes to collecting cash or making outbound calls but, aside from our own in-house schemes, there is very little available to us.”

For the HR professionals already employed in collection – a sector whose smaller agencies are fast being swallowed up by firms with more lucrative credit card or mortgage debts to chase – one of the thorniest issues is the hostility of debtors themselves.

“No schoolchild sets out wanting to become a debt collector,” says Lis Kendry, head of operations, recruitment and training at the Lewis Group, one of the biggest players in the market with more than 300 staff. “But having found their way into collection from perhaps customer service or telephone sales, most of my staff tell me that the satisfaction derived from reducing a client company’s debt by even a small amount can be very rewarding indeed.

“But the level of abuse, which ranges from minor profanities to serious threats, is becoming intolerable for many staff in the business,” she adds.

While the CSA is currently trumpeting a new training course for collectors faced with “harassment from debtors”, the organisation admits that the biggest issue its members face is the threat of a new legal clampdown.

Although the industry claims to have done much to improve training procedures and to adopt what Kendry claims is a “more compassionate approach to debtors”, the government is still dissatisfied.

Spurred on by spiralling numbers of complaints over alleged bully-boy tactics – in particular, the practice of sending threatening letters to a debtor’s last known address, even if they no longer live there – consumer minister Gareth Thomas is urging reform.

While Thomas’s current proposals would extend payment time for debtors and install a new breed of compliance champions within the collections agencies, the problem of tracing people is proving to be a sticking point.

The industry wants it made compulsory for creditors to be informed when a debtor already at “delinquency stage” – in other words owing money – moves home, as is the case in much of Europe, but this has so far been resisted by politicians.

Despite the wrangling, what Thomas calls “more sensitive training” from some agencies at least is already having an impact, argues Chris Hancock, managing director at collection firm Gasbox.

“Forget what you’ve heard or read about this industry,” he says. “We want to create relationships with customers that are long-lasting and effective, and that means dealing with the very negative emotions that arise when people are asked to settle their debts.

“Compliance with the law and the various codes of conduct that most of the industry is guided by is very important to us, but so too is the empathetic, human side of the job, which we see as being as much about coaching or even counselling as it is about bad debts.”

Case study: Clarity Credit Management

Kate Willson is head of HR at debt collection agency Clarity Credit Management. An SME (small to medium-sized enterprise) agency, Willson is responsible for 60 staff, mostly employed in telephone collection work, and there are a further 100 or so self-employed field agents.

She believes that by employing collectors in their 20s and 30s, Clarity is tackling head-on the negative image surrounding such work.

“Younger staff have no preconceptions about people in debt and consider it perfectly normal to have outstanding credit card bills or unpaid loans,” Willson says.

“This means they are non-judgemental when they talk to our customers, and in turn makes the debtor less defensive and more likely to co-operate over repayment terms.”

While she concedes it is the job of the collector to bring in as much revenue as possible, Willson believes that by “taking a friendlier, less heavy approach”, Clarity forms relationships with debtors and reduces the level of default.

“People pay other people, not credit card firms,” she says.

If the government is concerned that some agencies harass people at home or at work, or even speak to their neighbours, Clarity is finding that many households positively welcome different approaches.

“Some customers are far more at ease at being contacted via a text or an e-mail than being telephoned or visited and are far happier to talk terms with you.”

“By making the process as comfortable as we can, we hope people will be persuaded to pay up.”

Case study: Agilisys

“Getting under people’s skin and understanding customer psychology is an incredibly important part of the collection job,” says Vicky Oakes, head of collections at IT and outsourcing provider Agilisys.

And she stresses that those unable to do this are screened out early on.

“Although we certainly don’t teach our staff to get involved in mind games of any sort, we do train them to pick up on clues about customers from their voice or manner and to know when to back off,” she explains.

Oakes believes there is a serious lack of experienced collectors in the industry, particularly given the scale of public debt, and says that the workforce will need to grow fast to meet demand.

“I see it as a plus that churn rates are fairly standard at 30%, but when it comes to the more difficult accounts, such as utility bills and tertiary services – where there is no collateral involved and where the law can make it impossible, not to mention morally undesirable, to cut people off – relatively few people want to take the work on.”

To be a good debt collector, says Oakes, you need to be a natural salesperson with all that entails in terms of persistence and standing your ground. But while many collectors make the leap into sales or customer service, movement the other way is far less common.

“We try and show people early on what the job of a debt collector entails and if they have any moral qualms about it, we tend to steer them away at an early stage.”

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