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Recent updates to the FCA’s CONC 7 rules (PS24/2) represent a significant advancement in protecting consumers facing financial difficulties, particularly those using mortgage and consumer credit products. These changes, set to take effect in November 2024, are crucial as they provide stronger, more comprehensive support mechanisms for individuals at risk of or already experiencing financial hardship. By integrating key aspects of the coronavirus Tailored Support Guidance (TSG) into formal regulations, the new rules extend beyond temporary pandemic-related relief, making consumer… Read more

A summary of the final notice from the Financial Conduct Authority (FCA) regarding TSB Bank's handling of customers in financial difficulty, particularly between June 2014 and March 2020. The FCA found that TSB breached key principles concerning vulnerable customers, especially those struggling with mortgage payments, overdrafts, credit cards, and loans. Key findings included: TSB failed to appropriately manage arrears and customers in financial difficulty, affecting 232,849 customers and leading to £99.9 million in redress. A Skilled Person’s review revealed that… Read more

The reciprocity principle is a fundamental social rule that suggests individuals are more likely to return favours when they receive kindness. In the context of collections, this principle can be leveraged to improve debtor engagement and recovery rates. By demonstrating understanding and offering flexible solutions, creditors can foster goodwill, which may encourage debtors to meet their obligations more readily. This article explores the application of the reciprocity principle within a collections function, examining its importance, key considerations, and the anticipated… Read more

Implementing Social Norms Theory within a collections function can significantly enhance the effectiveness of debt recovery strategies for creditors. Social Norms Theory, is grounded in the idea that individuals' behaviours are influenced by their perceptions of how others in their social group behave and can be strategically employed to improve debt collection outcomes. This article explores the key elements needed to implement Social Norms Theory in collections, why it is important, key considerations, potential benefits, and examples of its successful… Read more

Loss aversion theory, rooted in behavioural economics, posits that individuals prefer avoiding losses rather than acquiring equivalent gains. This principle has significant implications for the collections function within a creditor's operations. Understanding and leveraging loss aversion can enhance the effectiveness of collection strategies, leading to improved recovery rates and customer relationships. Why Loss Aversion Theory? Loss aversion theory is vital in collections due to its psychological impact on customer behaviour. People are typically twice as motivated to avoid losses as… Read more

Nudge theory, a concept derived from behavioural economics, posits that subtle changes in the way choices are presented to people can significantly influence their decision-making. Within the collections function for a creditor, applying nudge theory can lead to improved customer interactions, higher repayment rates, and a reduction in delinquent accounts. This article explores the importance of nudge theory in collections, key considerations, the top ten elements needed for its implementation, and the potential benefits for businesses. Why Nudge Theory Nudge… Read more