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  • Cash in Hand: A better solution for collections? Posted on 06 September 2015

    Last week’s ITV documentary, ‘Cash in hand- Payday loans’ gave us a fly-on-the-wall view of the collections department at payday lender Uncle Buck.

    The pitch was that the programme would capture the tension of often cat-and-mouse exchanges between customers being pursued for unpaid loans and the team members whose bonuses depend on finding ways to make them agree to pay up.

    From what we saw, Uncle Buck’s collection processes seemed compliant with the FCA regulation. Yet listening into the calls (customers’ voices were played by actors) it was difficult to take much comfort from that. It felt like the customers avoiding paying were those who knew how to play the system. Perhaps the agent holding the silver trophy for highest collections had just been ‘lucky’ in dealing with customers less savvy on finding ways of not paying?

    With the tight controls now in place on payday interest rates and fees it doesn’t seem possible the team was collecting more than it cost. The department seemed to be there to send a message to potential defaulters: You can run, but you can’t hide. If payday lenders can’t now cover high loss rates with penal charges and fees it is indeed logical for them to respond by doing more to keep defaults low. Perhaps that is why Uncle Buck opened its doors to the cameras.

    Yet there must be a better - a fairer and more respectful way - of handling customers in default than barraging them with phone calls.  

    Perhaps payday lenders shouldn’t themselves chase customers in default and should instead outsource the job to expert collections firms. The firms could have clear responsibilities to the lender and to the consumers. They would contact customers as neutral third-parties and seek to arrange repayment plans that work for both sides. Should their efforts fail, then they would report that the customer had been given all opportunities and the lender would then be free to take legal action.

    One collections agent on the programme said “No-one wakes up and says, ‘I want to become a debt collector.’’ That rang true the way we saw collections being carried out at Uncle Buck. However between the payday industry and its regulator, it must be possible to find a better way of collecting debts than this - one where the collections personnel suffer less verbal abuse and can take pride in their jobs.

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