CREDIT
STRATEGYRisk I Policy I Conduct
November 2016
Do creditors know their own exposure?
DISTRESS CALLS THE CS INTERVIEW WHAT BREXIT MEANS FCA names firms topping Hugh Fitzpatrick HSBC’s economist fills the consumer credit Chief risk officer an information gap left complaints table Shawbrook Bank by govermment Are you on the right track to SUCCESS
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Data protection law: A known unknown?
Marcel Le Gouais Editor
his was inadvertently the correct sharing, appears to be high on the ICO’s and debt purchase sector, the GDPR will month to angle our editorial focus priorities. This was made clear in a maiden replace current legislation and drag data towards fraud and data security. speech from the new information protection law into the 21st century. The Information Commissioner’s commissioner, Elizabeth Denham, delivered EU members are now preparing to adopt TOffice (ICO) recently hoisted the issue onto late last month. the new law by May 2018 but as Denham the mainstream news agenda by fining After mentioning an ongoing review into admitted, the referendum result has thrown TalkTalk and Ocean Finance. The former data sharing between Facebook and the ICO’s data protection plans “into a was culpable of data security failures while What’sApp, inevitably, she raised the spectre state of flux.” the latter spammed seven million customers of the EU General Data Protection Perhaps most critically, she said it was without sufficient consent (see p6). Regulation (GDPR). Leaving huge “extremely likely” that the GDPR will be TalkTalk’s £400,000 fine was notable in preparatory implications for the collections live before the UK leaves the European being a record penalty issued by the UK’s Union, telling delegates at a London event: data protection regulator. “For most people in this room, the GDPR A hack on the telecoms company in will be something you’ll have to follow, to October last year enabled access to nearly do business where you want to.” 157,000 customers’ names, addresses, dates As for companies operating only in the of birth, phone numbers and email addresses. UK, Denham explained that it’ll be up to In almost 16,000 cases, the attacker also the government what happens here, both in secured access to bank account details and the middle period from May 2018 to sort codes. whenever the UK formally leaves the EU. The act itself was an SQL injection attack, For now, this might remain a known a common cyber attack well understood for “The information unknown, but Denham added that UK- more than 10 years, for which known commissioner said it operating companies will still need to be defences exist. deemed “adequate or essentially equivalent.” Tellingly, the ICO said that “for no good was ‘extremely likely’ She also emphasised that a global reason”, TalkTalk overlooked the need to economy requires “consistent standards”. ensure it had robust measures despite having the GDPR will be live So perhaps no matter the model in the required financial clout. consumer credit, whether it’s exclusive to Accountability for data protection at blue before the UK leaves the UK or not, it seems there may be no chip firms, as well as transparency on data the European Union” escape from the GDPR. CS
creditstrategy.co.uk 03 Contents
Dispatches People 06 How a Court of Appeal protects 31 Appointments pensions in bankruptcy estates Shawbrook Bank’s new head of collections, plus TSB poaches 08 Lessons learned on complaints Nationwide’s CRO As the Financial Conduct Authority names and shames, we look at who’s topping the table for complaints Streams 32 Utilities & Telecoms Awards The winners are announced and those Analysis 06 Pensions in bankruptcy who made the U&T Top 50 are revealed 10 Data sharing agenda Why sharing information is critical for 34 Debt sale in Europe utilities and telecoms firms to fight fraud Does Banca IFIS have the answers to Italy’s crippling NPL problem? 12 Modernising the public sector 9,000
Councils reveal how they’re updating 6,750 35 Car finance
collections for a modern age - no really 4,500 Me and Mr Jones: Fred Crawley meets the boss of Black Horse 13 CCJs: Abuse of the system? 2,250
Shop Direct Finance Volkswagen Cabot Instant Close Brothers 39 F5 Conference After Daily Mail allegations over CCJs, Company Financial Services Credit Management Cash Loans Credit Strategy delves into the stats It’s London vs Berlin for the title of 08 | FCA complaint data Europe’s fintech champion
36 The Collections & Customer Service Awards Opinion The full shortlist for 2016 is announced 14 The Watchman in which HMRC features strongly Fred Crawley’s disection of how firms have rendered the word ‘leading’ 40 12,000 jobs saved meaningless in describing themselves How the TRI Awards finalists
Mark Berrisford-Smith are providing a measurable boost
16 Brexit means a slowdown Head of economics, to the economy Mark Berrisford-Smith, chief economist HSBC UK Commercial Banking (p16) at HSBC Commercial Banking, explains what Brexit may actually mean for the “A recession looks to be unlikely, Events economy but a noticeable slowdown is 41 All Credit Strategy’s upcoming definitely on the cards for 2017. events in one place 17 A voice for SMEs Hopefully, it will be short lived” IGF Invoice Finance on why SMEs need funding in sickness and in health 42 The fifth estate An insider’s view on fair share 18 A little more action please contribution in debt management An intense debate at the CSA conference revealed why co-ordination is required, writes John Ricketts
19 Affordability and trust Payday lenders’ affordability checks Stuart Howard are under fire. Dollar UK’s Stuart Chief executive, Dollar UK (p19) Howard believes trust can be won back “Businesses like ours exist in no 25 20 Fair share funding small part to help people who The number of Payplan’s John Fairhurst on the future are under banked, unbanked, fintech firms mulling of debt management plans relocating to Berlin, suspicious of mainstream finance post Brexit 21 Head to head or outright unwilling to take on See p39 Game on: Fred Crawley vs Sean Feast long-term liability”
04 CREDITSTRATEGY November 2016
CS COVER STORY
22 Identity theft Before the revelation of a (historic) cyber attack on 500 million Yahoo accounts emerged, a report revealed that around £10bn of identity fraud has been committed against individuals in the past year. Amber-Ainsley Pritchard asks if major creditors are really aware of their own exposures.
170,000 The number of identity fraud cases in 2015, up from 114,000 THE CS INTERVIEW in 2014 26 Access all areas Source: Cifas Hugh Fitzpatrick, chief risk officer at Shawbrook Bank, on creating a risk culture while acting as “the conscience of the bank”.
Shard Financial Media UK Financial Conduct MARKETING Events Executive Subscriptions: First Floor, Axe & Bottle Court Authority (various) Head of Marketing Antonella De Cuia [email protected] 70 Newcomen Street, London SE1 1YT Sophie Guibaud, vice president of Lauren McWilliams / 020 7940 4836 020 7940 4806 01635 869868 Tel: 020 7940 4835 European Expansion, Fidor Bank [email protected] [email protected] Printed by: Stephens and George (S&G) Fax: 020 7357 6969 Stuart Sykes, group head of Credit Strategy is a subscription creditstrategy.co.uk debt recovery, Myjar Senior Marketing Executive PROJECT MANAGEMENT news magazine. Annual rates: (UK) Lena Elhibir / 020 7940 4837 Sofia Homem / 020 7940 4825 £195 for one year (£351 for two years), PRODUCTION [email protected] [email protected] (Overseas) £249 for one year (£448 for EDITORIAL Designers two years). Editor Anabela Abreu Marketing Assistant Sam Eckett / 020 7940 4111 Marcel Le Gouais / 020 7940 4830 [email protected] Jonathan Simmons / 020 7940 4826 [email protected] It is published monthly by [email protected] [email protected] Shard Media Group. Barnaby Attwell FINANCIAL No part of this publication can be Consulting Editor [email protected] CONFERENCE PRODUCTION Financial Controller reproduced without the written Fred Crawley / 020 7940 4813 Head of Conference Production Sam Singleton / 020 7940 4808 permission of the publisher. Views [email protected] COMMERCIAL Mike Jeapes / 020 7940 4847 [email protected] expressed in this publication are not Sales Director [email protected] necessarily those of the publisher. Content Writer Vicki Clubley / 020 7940 4827 Office Manager ISSN 2399-1372. Amber-Ainsley Pritchard [email protected] Conference Producer Sharon Dennis Some of the articles and guidance 020 7940 4816 Andrew Tosh / 020 7940 4818 020 7940 4807 included in this edition may well make [email protected] Business Development Director [email protected] [email protected] a contribution to the reader’s personal Michael Stanton / 020 7940 4812 CPD requirements. CONTRIBUTORS [email protected] EVENTS OPERATIONS DIRECTORS Christine Toner, freelance journalist Head of Events Chairman Business Development Director Jenna Abbott / 020 7940 4833 Nick Miller COLUMNISTS Ben Miller / 020 7940 4803 [email protected] Garreth Cameron, group manager [email protected] Managing Director (business and industry), Information Deputy Head of Events Luke Broadhurst Commissioner’s Office Delegates Sales Claire Davison / 020 7940 4824 Mark Berrisford-Smith, head of Vyvy Nguyen / 020 7940 4821 [email protected] Publishing Director economics, HSBC UK Commercial [email protected] Kamala Panday / 020 7940 4839 Banking Events Executive [email protected] Robert Skinner, chief executive, Delegates Sales Brenda Li Quadri Lending Standards Board Ajay Barot / 020 7940 4848 020 7940 4829 Finance Director Stuart Howard, chief executive, Dollar [email protected] [email protected] Douglas Wright
creditstrategy.co.uk 05 FRONTLINE NEWS I ECONOMIC STATISTICS M&A I REGULATION I A WORD TO THE WISE THE VENT I KEYNOTE UPDATES Court ruling protects pension pots in bankruptcies
he Court of Appeal has ruled that individuals facing bankruptcy application, by a trustee in bankruptcy, for an income payments order. will not be forced to hand over their pensions which are not yet McPhie explained that the Court of Appeal decided the pension Tin payment, to pay off debts. pot not yet paying out remains excluded from a bankrupt’s estate. On October 7, the decision in Horton v Henry ruled that pensions The decision means that income the bankrupt is entitled to, only not yet in payment are protected from bankruptcy. applies to a pension fund that is actually in payment. There is also In an article on the case for creditstrategy.co.uk, Graham McPhie, now clarity that a trustee has no right to compel a bankrupt to take partner at insolvency law firm Moon Beever, explained the issue any particular election in relation to a pension scheme. at the crux of Horton v Henry. This issue was the extent to which McPhie added: “There has always been a balancing act to ensure a pension not yet in payment could be taken into account on an that pension pots have a measure of protection. However creditors are not prejudiced by this result, because income from the pension can be taken into account for income payment purpose. Plus, excessive contributions to a pension can be recouped in certain defined circumstances.” But Andrew Patten, director and pensions lawyer at Fieldfisher, said: “The ruling means that creditors’ access to a bankrupt’s pension fund remains a matter of pot luck, depending on whether the person has started their pension. “This has serious implications for creditors as, under the new pension freedoms, more people are deciding not to take regular pension payments. “With a pension fund often being one of a bankrupt’s most valuable assets, the government should consider if the pendulum has swung too far in favour of bankrupts, and if it would be more appropriate for creditors’ rights to be based on the capital value of a bankrupt’s pension fund and their ability to build up new retirement savings.”
ICO teaches hard lessons in data protection The Information The data protection regulator ICO investigators found that Manchester-based Ocean Commissioner’s Office (ICO) said the hacker had been the attack took advantage of Finance believed it was stepped up its enforcement allowed to access hundreds technical weaknesses in complying with the law activity this past month, of thousands of customers’ TalkTalk’s systems. because the third party firm issuing fines of well over data “with ease.” The ICO also fined it obtained names and phone £500,000 for security and The ICO’s investigation Intelligent Lending, trading as numbers from claimed it consent failures. found that an attack on the Ocean Finance, £130,000 for had people’s consent to This month the ICO fined company last October could spamming individuals with send texts. TalkTalk £400,000 for have been prevented if seven million texts. The texts But an ICO investigation security failings that enabled TalkTalk had taken basic were sent to offer found the consent was a (well-documented) major steps to protect prospective customers a new insufficient to meet cyber attack on its customers. customers’ information. credit card. legal requirements.
Vital Statistics Are banks dying a slow death?
This month on Chris Skinner’s blog, the finanser. com, which takes an irreverent look at the £34m banking world, a Twitter discussion on fintech The amount that payday lender CFO Lending was highlighted, which involved industry has agreed to pay in redress to more than heavyweights Simon Taylor (an ex-banker) and 97,000 customers. The lender admitted to the THE Mariano Belinky (a banker). Financial Conduct Authority that it had taken payment from customers without consent and VENT For more on the discussion visit: sent threatening, misleading letters. Choice cuts thefinanser.com/2016/09/banks-not-dying.html from social media
06 CREDITSTRATEGY Dispatches
A WORD TO THE WISE
“Last year, it was reported that the Financial Conduct Authority (FCA) was dropping its review into banking culture. This led to commentators saying the FCA doesn’t care about culture in financial services. Nothing could be further from the truth. Culture matters a great deal” Andrew Bailey More competition in retail Chief executive, banking, but on what grounds? Financial Conduct Authority
The news that mobile-only bank Atom will of Atom, said: “Building a bank in the right “Police forces found it much easier open up to all customers probably brought way takes time. The key to providing our to deal with the stealing of milk good news for suppliers and the government customers with the best banking experience bottles than with the defrauding of this month. possible is to continue to build the bank people out of larger amounts” Amid a context of Treasury briefings to piece by piece, listening to customers. We Lord Goldsmith regulators to cultivate conditions for do not want to rush simply to say we were Former attorney general increased competition in retail banking, the first.” Atom announced that it was spreading its Atom offers two fixed saver accounts net to a wider pool of potential customers along with SME lending via a panel of “I have lost all faith in banks, after an initial six-month period of an specialist business intermediaries. and my big question is, are they invite-only phase. It is also committed to launching further really doing enough to keep every During this phase registration codes were products in the near future including customer’s money safe?” only sent to customers who registered an residential mortgages, current accounts, Gloria Hunniford interest in the new bank via its website. debit card and overdrafts. Broadcaster, who recently had £120,000 stolen Atom said this allowed the bank to open But as it launches new products, senior from her account by a fraudster in a controlled way while learning from bankers have told Credit Strategy that customer feedback and therefore refining its they’re trying to work out – what is it that app in recent months. Atom is competing for? “We are living in an age of retail Now the invite-only phase is over and the Senior directors are perhaps wondering revolution, but water customers bank is open to everyone, customers can what Atom will offer when incumbents are are being left behind. The download the app and open an account finding it harder and harder to differentiate without the need of entering a branch or and compete on pricing. Maybe the answer uncomfortable truth is that, when filling in any paperwork. comes from Atom’s founder in using the it comes to retail offers, water Anthony Thomson, founder and chairman words “customer experience”. companies provide an analogue service in a digital age” Cathryn Ross Chief executive, Ofwat “Fintech didn’t disrupt “@sytaylor low int rate env, reg “Banks don’t know how banks but banks are costs, restruct charges... look for to deliver revenue in the slowly dying. Creating an the long term cycles. Some rev pools digital age, that is going ever growing opportunity shrink, others grow. Not dead yet. to kill many of them before “My main role will be to progress for #fintech” Banks’ve always focussed on cost” they learn” codes of conduct for GDPR, the EU @sytaylor @belimad @brettking Simon Taylor Mariano Belinky Brett King data protection regulation and the 11FS Santander InnoVentures Moven pan-European code for collections” Leigh Berkley Last month Berkley was appointed vice president of the Federation of European National Collection Associations (FENCA)
creditstrategy.co.uk 07
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Analysis
Complaints drop but are lessons being learned? Data from the Financial Conduct Authority shows more than two million complaints were unloaded against financial services firms in the first six months of 2016. AMBER-AINSLEY PRITCHARD investigates where and why the most complaints have been made
n the modern regulatory landscape, how complaints are “Arrears-related complaints across all types of managed says a lot about how a financial services increased by five percent to Iculture permeates through any 28, 211 in the first half of this year, but they made financial services firm. That’s one of the key reasons why up only about one percent of all complaints” the Financial Conduct Authority (FCA) collects and publishes the number of and six percent in insurance. second half of the year.” complaints made against financial Hannah Maundrell, editor-in-chief of In contrast, NatWest had a 10 services firms twice a year. Money.co.uk, said: “I suspect the percent drop of complaints The data for the first half of 2016 numbers we see are only a drop in compared to the second half of 2015. was published this month and is the ocean compared to the overall broken down into product categories, amount of people who aren’t happy Low arrears complaints to help both consumers and creditors with the standard of service they Generally, complaints about arrears see where certain products and receive from their provider.” within the banking and credit cards practices can go wrong. category were far lower than in any The information shows that more Most complained about firms other area of conduct. than two million complaints were Across all of the product categories For example, advising, selling and made against banks, insurers, lenders Barclays was the most complained arranging related complaints in and other financial services firms about firm so far this year, with around banking and credit cards were nearly between January and the end of 287,000 complaints made against it, a 219,000, but arrears complaints in this June this year. three percent increase compared to same area were just under 14,000. This is a near three percent decrease the second half of 2015. Arrears-related complaints across all of complaints in comparison to the Nearly half of these complaints, types of financial services increased previous six months but as 124,000, were made in relation to by five percent to 28,211, but made up Christopher Woolard, the FCA director banking and credit card products. only one percent of all complaints. of strategy and competition said, Not too long ago the Financial Where there have been hundreds of firms still need to reduce consumer Ombudsman Service also released thousands of cases made against firms dissatisfaction. its complaints data and found Barclays in relation to banking and credit cards, Commenting on a 2.6 percent had the most banking and credit the number of home finance reduction in overall complaints, card complaints made against it complaints is a little lower. Woolard said: “The figures show firms during the year between June 2015 Bank of Scotland topped the home are taking our feedback seriously.” and June 2016. finance complaints table, followed by Complaints are broken into five Of the bigger firms HSBC and Santander, HSBC, Landmark product groups; banking and credit Barclays had the biggest increase of Mortgages and once again Barclays. cards, insurance, home finance, complaints compared to the previous investments and pensions. six months, with both experiencing a Consumer credit The number of complaints made three percent rise. The FCA data also recorded may have only reduced by a small A spokesperson for HSBC said: complaints made about consumer margin but the amount of redress paid “Great customer service and credit to financial firms. Shop Direct to consumers, who have been mis- satisfaction is very important to had the most consumer credit sold financial products, reduced by an everyone at HSBC, and when things complaints opened against it - 8,681. even smaller margin. go wrong we want to resolve them as The firm declined to comment on The total redress paid back to quickly and fairly as possible. the figure when approached by consumers in the first half of this year “The latest published figures show Credit Strategy. was £1.96bn. an increase in complaints which In terms of consumer credit Whilst the amount of redress related to an increase in call waiting grievances, Volkswagen Financial reduced as a whole, the amount paid times in our contact centres. Those Services had the second highest back to consumers increased across issues have now been resolved, but we number of cases opened with 4,262, only two of these product categories, will continue to work hard to reduce followed closely behind by Cabot rising two percent in home finance the number of complaints in the Credit Management with 3,646.
08 CREDITSTRATEGY `
Complaints made about consumer credit to firms, H1 2016
9,000
6,750
4,500
2,250 Number of complaints
Shop Direct Volkswagen Cabot Instant Close Brothers Finance Company Financial Services Credit Management Cash Loans
Source: Financial Conduct Authority Opened Closed
Complaints: Banking and credit cards, H1 2016 Most complained about firms, H1 2016
300,000
6,750
150,000
75,000 Number of complaints Barclays Lloyds Bank of HSBC NatWest Barclays NatWest Lloyds HSBC Santander Scotland
Source: Financial Conduct Authority Source: Financial Conduct Authority
Cabot Credit Management said the Providers with the highest number Services UK, with both at 64 percent. number of complaints represents one of consumer credit complaints upheld per every 1,000 customers. during the first half of 2016 were FCA changes A spokesperson for the debt Alphabet GB and FCA Automotive In April 2017 the FCA’s complaints purchaser said: “Cabot was one of the publications will change in first major firms in debt management correspondence with the to be authorised, on March 11 2016, UPHELD COMPLAINTS ABOUT regulator’s new rules on improving resulting in it being the only firm to CONSUMER CREDIT TO FIRMS complaints handling. report to date in this sector. This means the twice-yearly “In line with FCA expectations Cabot Credit Management 50% publications will provide sets of data Shop Direct Finance Company 47% Cabot registers any expression of Volkswagen Financial Services 41% including figures that compare the customer dissatisfaction as a customer Close Brothers 36% number of complaints in relation to complaint, many of which are verbal in Instant Cash Loans 16% the size of each business. nature and resolved at the point of The regulator said it also aims to The FCA published the proportion of expression. There is a dedicated begin publishing a completely new complaints upheld about consumer credit team to monitor themes and as a to firms. These figures refer to not only section for consumer credit related result the company continues to the complaints made in the first half of data once all firms are authorised learn from this valuable source of this year, but also for any complaints and submitting their complaints made previously. customer feedback.” data to its teams. CS
creditstrategy.co.uk 09
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Analysis
A shared solution for utilities and telecoms This year’s Utilities & Telecoms Conference, at St John’s Hotel in Solihull, featured speakers from the UK’s largest energy, water and telecoms firms. Data sharing, fraud and above all vulnerability, continue to dominate the agenda. AMBER-AINSLEY PRITCHARD reports
database shared between psychological abuse, who are utilities and telecoms prevented from handling their own companies could improve finances. Customers suffering this Athe treatment of vulnerable type of abuse, Chisholm said, don’t customers and help tackle fraud. often disclose this to their supplier This was the over-riding view from because they don’t think they can speakers at last month’s Utilities help. He described a situation where and Telecoms Conference, who someone suffering such abuse represent some of the largest managed to escape their abuser and providers in both sectors. set up home elsewhere. Speaking on a panel, Steve Crabb, The person contacted their supplier head of vulnerable customers at regarding their new address and the British Gas, told delegates: “Don’t be situation they were in, but the scared of data sharing, as long as it’s supplier sent a redirect notice to in the best interest of customers.” Jack Bevan, senior policy researcher their old address. Vicky Jones, senior manager of at Citizens Advice, raised the point This resulted in the abuser credit and fraud customer payments that young people are more likely to discovering where the person at First Utility, expressed the view that be open to sharing data if they know suffering had moved to. sharing data across all industries who’s using it and if they have the Chisholm explained how the would help tackle fraud. option to opt out. relationship between customer and During a separate panel session Bevan also described how it would supplier must be improved to prevent Amanda Scovell, cash and debt be useful to create a “data dashboard” these mistakes from recurring and manager at Thames Water, warned for consumers so they could see who potentially threatening a person’s life. that a supplier cannot help its had access to their data, who is using The general quality of contact customers unless they know their it and how it’s being used. between customers and suppliers individual circumstances. Data sharing and its link to the also came up in this panel session, She said: “You must know your treatment of vulnerable customers with First Utility raising the point that customer and how to best save was a theme throughout the day, with a good conversation could even them and if you don’t - the many of the panel discussions replace a formal process imposed customer journey is broken before revolving around vulnerability. on a customer. it has even started.” During a debate on this specific Ian Parry, head of customer topic Zoe Dixon, consumer affairs manager at Barclays, described how there is “thankfully” no longer a OPENING UP THE WATER MARKET checklist regime. She said: “Vulnerable customers are Keynote speaker Neil Pendle no longer classified as being covered the opening up of vulnerable based on a particular illness competition in the non-household or their age, but are now based upon water market, due for next April. their individual circumstances.” The managing director of Ian Parry Crabb added: “We don’t need to solutions company Waterscan, described how this may cause Head of customer payments, First Utility know what makes a customer customers concerns. vulnerable just what we can do to He said that retail competition help them.” could be dangerous for the market “A good conversation Alistair Chisholm, credit liaison as there is bound to be big switches with customers can arrive policy officer at Citizens Advice, in the first month of its introduction. talked about customers who suffer Pendle also enlightened delegates to the same point as the from financial abuse. to news that United Utilities and income and expenditure Borne from domestic abuse, Seven Trent Water were combining financial abuse results in people to introduce a new supplier called regime would” suffering from sexual, physical and Water Plus.
10 CREDITSTRATEGY creditstrategy.co.uk 11 `
payments at First Utility, was on the panel and explained how the removal of the income and expenditure process could be a positive idea. He explained how First Utility had tested its removal, adding: “A good conversation with customers can arrive to the same point as the income and expenditure regime would.”
Collection panels In a separate panel session speakers from EE, Extra Energy and Severn Trent discussed the outsourcing of debt as part of a panel discussion on collections. The overall opinion of the panel was L-R: Steve Crabb, British Gas; Ian Parry, First Utility; Alistair Chisholm, Citizens Advice; that fi rms should be trying to reduce Mark Wilkinson, Northumbrian Water; Zoe Dixon, Barclays the number of DCAs they outsource debt to. Paul Stretton, head of debt and credit at Extra Energy, said: “Our focus Q&A with this year’s U&T Top 50 over the next year is to reduce how often we use DCAs, but make sure The U&T Top 50 (see p33) celebrates water sector and how we can share that when we do we use DCAs they the leading professionals who, within data to recognise who may be in a are ultimately an extension of the last 12 months, have had a vulnerable position.” ourselves and our practice.” positive impact on the credit and After the Utilities & Telecoms collections industry. Paul Stretton conference Credit Strategy announced Amber-Ainsley Pritchard checked in Head of debt and credit, Extra Energy this year’s U&T Top 50, for which you with a few of this year’s top 50 Q: What did you enjoy about the can see the full list on p33. CS members to discover what they took conference? from the conference sessions. PS: “The environment here is all about fresh thinking and triggering Sarah Henry ideas by sharing what we have all Agency manager, domestic debt been doing and see whether or not it operations, Scottish Power is working.” Q: What will you take from today? SH “The information learned in the Steve Banks fraud talk with Stuart Sykes of Myjar. It Head of domestic credit risk, was interesting to hear what he had to RWE npower say about IP addresses being used to Q: What challenges will your team Steve Crabb commit fraud, this is defi nitely face across the next year? Head of vulnerable customers, British Gas something we need to think about.” SB: “In this highly competitive market there are many issues we must focus Amanda Scovell on, specifi cally vulnerability.” “We don’t need to know Cash and debt manager, Q: How does it feel to be part of the Thames Water Top 50? what makes a customer Q: What will you be discussing with SB: “I’m very pleased. It’s obviously vulnerable just what we your team on return to the offi ce? nice to be recognised for the hard can do to help them” AS: “Defi nitely vulnerability in the work we all put in. “
Utilities & Telecoms Conference sponsors:
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Analysis
How to drag public sector collections into the modern age The Local Authority Civil Enforcement Forum’s (LACEF’S) annual event was held alongside the Utilities & Telecoms Conference and Awards last month, at the same venue. LACEF’s FREDDIE DAWKINS picks out the highlights
ouncils across England and Wales are slowly catching up with their commercial Ccounterparts, when it comes to debt collection and enforcement. Identifying ‘won’t pays’ from ‘can’t pays’ can be done in lots of ways but until recently councils relied on lots of telephone calls and expensive Panellists at LACEF included Brighton & Hove Council and Northumberland County Council postal mailings. However, at its latest annual from BiT, Medway has radically no objection to the methodology and conference, LACEF heard from several increased the number of council tax participation of councils. speakers at the cutting edge of debtors choosing direct debit as the The north and east of England are applying technology and psychology preferred payment method. both rapidly gaining reputations as to improve collection results. financially smart and efficient council Michael Sanders, head of research at Trust pilot areas, with Northumberland County the Behavioural Insights Team (BiT Other highlights from the conference Council, after seven years of - previously ‘The Nudge Unit’ within included a debut appearance from development, now collecting local the Cabinet Office) spoke at the Jamie Waller, the new chief executive taxes and other sundry debts on Solihull conference on September 29, of Japanese-based Hito. Waller behalf of over seven local authorities. at the St John’s Hotel in Solihull. recently sold his founding stake in Keith Teasdale, recovery manager, He gave solid case study examples enforcement firm JBW Group and is financial services at Northumberland of how, with just a small change here now leading the launch of Hito and County Council revealed how much and there in terms of words and letter its specialised services and software, more efficient his team are now at design, collection targets could be based on propensity to pay models. bringing in revenue, and how substantially improved. His presentation included case Northumberland is providing cost- Sanders gave examples from HMRC studies of how profiling debtors to the effective collection services to others and a campaign to improve collections public sector could be done quite fast in the public sector. from self-employed taxpayers, which – but at substantial cost. Hito aims to The adoption of a shared service yielded more than £200m in early make profiling and propensity to pay model was echoed by the Anglia payments; from Merthyr Tydfil and outcomes more affordable to the Revenues Partnership (ARP), where Newport Councils in Wales, where public sector in the UK. A pilot project two years of planning and lobbying for small shifts in language (after careful to register all council-secured liability elected members support has resulted data analysis), have made significant orders against council tax and in a team of more than 200 council contributions to revenues. business rates defaulters, was also employees administering the tax and Sanders also told more than 50 launched at the event. other debt collection and enforcement member councils at the conference Steve Nicholson, project consultant services of differing authorities. that incoming telephone queries from for Registry Trust, told councils how Paul Corney, head of ARP and Nikki debtors could be turned into the trust is working with several local Holley-Smith, ARP enforcement collection calls with the right scripts authorities already, passing manager, gave a powerful two-handed and gave several examples of information to/from Experian, so presentation, emphasising how, by successful campaigns. that better and fuller credit and debt having control of their own in-house Following Sanders, LACEF members profiles could be made available to enforcement agents, they have heard from Patrick Knight, finance creditors. The project has been achieved increased collection rates operations systems manager at checked by the Information with significant surpluses being added Medway Council in Kent. With support Commissioner’s Office, which raised back to general council funds. CS
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Is the system for CCJs really being abused? A Daily Mail article recently revealed that nearly 740,000 county court judgments in the financial year 2014/15 were undefended or not heard in court. Amid an apparent government probe, MARCEL LE GOUAIS asks if ministers will take a balanced view
here were a few intakes of that they were the subject of any serious, long-term implications for the breath last month when a judgment because correspondence collections industry. Daily Mail front page carried was sent to outdated addresses. In Tthe headline: Lives ruined for some cases, families discovered they The history a sake of a penny. had received a judgment against them To recap on the first bullet point It was the result of an investigation years after the event. earlier, while the statistics show there into the total number of county court 3 The Ministry of Justice (MoJ) is has been an increase in the past three judgments (CCJs) issued by various now looking into the use of CCJs, years in the issuance of CCJS, they are creditors to individuals during the following a response from the Prime by no means at historical high levels. past 20 years. Minister’s office to the Daily Mail’s calls Far from it, in fact. Using information secured via a for an investigation. The table below left, sourced from Freedom of Information (FOI) request, This third point demonstrated a the MoJ’s response to the FOI request, the article detailed a large rise in debt classic journalistic exercise in shows an increase in recent years, but judgments against families who were exacerbation, by presenting it’s barely comparable to the early unaware about them, claiming that in commentary on an action, as direct 1990s. There could be many one case a debtor had been sued for action itself. underlying factors to this, not least the just a penny. The Daily Mail’s follow up article country’s beleaguered economic Most of the newspaper’s vitriol was claimed Theresa May had “vowed” to position at the time, but also the fact aimed squarely at ParkingEye, which investigate abuse of the CCJ system. that litigation has become so much collects parking fines, but it added What actually happened is that a more expensive in recent years. that customers of HSBC, Lloyds Downing Street press officer merely When the historic numbers were put Banking Group, Barclays, NatWest, confirmed what the industry already to the MOJ, along with further Vodafone, O2, Npower and United knew – that the MoJ would be looking questions, a statement was received Utilities had all been issued with CCJs. into it. However, confirmation of the from courts minister Sir Oliver Heald, As could be expected from an MoJ’s attention to the issue, is by no who said: “These are serious claims emotive story, certain aspects of the means the same as direct intervention which will be looked at urgently. Our CCJ issuing process were given little from the PM. legal system is world-leading and we or no attention. And it’s a fair bet that it’s unlikely are determined to ensure that it is not The civil procedure rules for the MoJ will find the appetite, open to abuse. example, were not mentioned, or the resources and cash to launch a “We are already modernising the specific obligation on creditors to lengthy, formal investigation, which system by spending more than £700m issue against the last known address. would lead to a conclusion with any to reform and digitise our courts to The more uncomfortable questions in deliver swifter justice. case studies - such as, did the “Anyone deliberately providing borrower tell all their creditors before false information to the courts faces they moved - didn’t tend to be asked. CCJS ISSUED BY YEAR prosecution.” Instead, the article’s main points can Peter Wallwork, chief executive of be summarised thus: Calendar year CCJs the Credit Services Association (CSA), 1989 928,526 1 Around 85 percent (736,000) of 1990 1,745,402 said: “The CSA is unaware of any nearly 866,000 CCJs were issued by 1991 2,214,645 incidents – and wholly rejects the default against individuals in the accusation that a creditor would use financial year 2014/15. Most of these, if Financial year CCJs litigation to deliberately ‘wreck the not all, had been issued at the County 2012/2013 647,638 finances of consumers’ by intentionally 2013/2014 711,274 Court Business Centre. 2014/2015 865,855 having a judgment passed without 2 Many individuals were unaware their knowledge.” CS
CREDITSTRATEGY creditstrategy.co.uk 13 Opinion
The Watchman The blind leading the blind Leading journalist FRED CRAWLEY explains why saturation of the description ‘leading’ in marketing copy has rendered the word meaningless
Fred Crawley Consulting editor, Credit Strategy
ast month in this column, I laid agricultural process optimisation solutions in press releases is in the hope that journalists, into press releases which try to the southwest UK” sounds worse than “an either lazy or time-poor, will copy-paste it disguise marketing copy as agricultural software company”. straight into published copy, resulting in a “hot news”. And yes, you can protest that you mean free endorsement. In general, however, this LI wasn’t criticising businesses which seek ‘leading’ in terms of criteria other than the is the first habit we beat out of new to build their profile in the media. In fact, I traditional sense of size or sales reporters. I even kick up a fuss when my think businesses with an appetite for this are performance… but please don’t count on own marketing team tries to call us a capable of feeding into top-quality output; on anyone else to use the same definition. leading brand. p21 of this issue I’ve written a piece But even putting these issues aside, is For whatever reason companies use the alongside veteran PR Sean Feast about there much of an advantage to be had in term, however, it’s not a good idea. When exactly this. But I did make the point that an using the phrase at all? I’m sent a release and ‘leading’ wafts up at advert is an advert, no matter how many I see a lot of small businesses in particular my face from the first line, I know I’m times someone calls an editor to tell them use the L-word, in an attempt to seem dealing with a company that would rather it’s a “story”. larger than they are. And when it tell me how impressive it is, rather than Honesty, in short, is the best policy. And subsequently becomes clear how big the show me. Often, that will make me move on while I don’t buy into a lot of the self-regard business actually is, the use of the term to the next email. many journalists have for their profession, I seems like a mark of insecurity. This may seem at best pedantic and at do think we’ve got a fairly sound eye for But there’s no reason a company should worst pompous, but I’d call it practical. I get bullshit deception. even need to disguise its real size to be sent well over 100 press releases every day, Continuing last month’s theme, therefore, noticed – if a small business has performed and only have a few seconds to spend I’d like to focus on a particular kind of exceptionally or done something unique, it’s scanning the body of each of them – the deception – one that’s quite often attempted interesting no matter the size of its turnover. truth of the matter is, I’ve not got long to with the best of intentions – and offer some Another reason companies use ‘leading’ in spot what’s going to be relevant. advice on how to avoid it. There are several other peculiar things Here is that advice: Don’t describe companies do to obfuscate what they yourself as “leading”. actually are (in another column, I’d love to If you are not the biggest, or at least the talk about things such as “providers of most instantly recognisable business in your solutions” and “experts”), but in general, the market, you’re probably not leading. And if “If you are not the best terms a company can describe itself in you are the leader, you should be enough of biggest, or at least are the simplest ones. a household name that people know it It’s a journalist’s job to represent implicitly – so you shouldn’t need to say it. the most instantly information about companies to audiences Yes, you can continue to subdivide your in the simplest and most honest fashion. market until you’ve defined a niche which recognisable business The more simplicity and honesty there is in you do lead in, but if you’re not careful this in your market, you’re the communications companies extend, can get so longwinded as to look a bit silly. therefore, the keener journalists will be to “The leading provider of cattle-specific probably not leading” work with them. CS
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What does Brexit mean? Capital spending cuts and a slowdown Consumers might still be spending, but the scaling back of business investment and inflation acceleration could hit Britain’s economic growth. In his first regular column for Credit Strategy, MARK BERRISFORD-SMITH explains how
Mark Berrisford-Smith Head of economics, HSBC UK Commercial Banking
t’s a statement of the obvious that the vote to leave the EU was a pivotal moment in Britain’s modern political history. IBut as Theresa May’s new government starts to confront the array of policy choices that now have to be made, the impact on the economy has been minimal. Indeed, it’s tempting to wonder what all the pre- referendum fuss was about. Yet while the economy hasn’t fallen off a cliff and isn’t about to, it’s still much too soon to assume that everything will continue to be just fine. The decision to exit the EU means there will be uncertainties for businesses of all types and sizes that will not be resolved quickly. The formal exit process, via the triggering of Article 50 of the Lisbon Treaty, as announced by the Prime Minister in recent weeks, will not get underway until some “A recession looks to be unlikely, but a noticeable time in the first quarter of next year. slowdown is definitely on the cards for 2017” It therefore seems highly unlikely that we will know much before 2018; and it could take much longer than that to fill in all the gaps. Meanwhile, July’s surveys turned out course through these uncertain times. to be an expression of shock rather than an In contrast, there has been nothing at all In stasis? assessment of economic fundamentals, with amiss with the willingness of households to The weeks immediately after the referendum the readings for August rebounding strongly. spend. Consumer sentiment may have saw the inevitable roller-coaster ride for The combination of resurgent survey plunged in July, but it turned out to be an equity and bond markets, a steep fall in the readings and strong hard data from just extremely strong month for retail spending, value of the pound, and some grim before the vote helped to stabilise Sterling, with a monthly increase in the volume of readings from surveys of consumer and which has now traded in narrow ranges purchases of 1.9 percent. This level of business sentiment. against the Dollar and the Euro since spending was more or less maintained during But the markets soon settled down, once mid-July. August, so that unless anything went they realised the Brexit vote was likely to Currently, businesses are considering their seriously awry in September, the next batch delay still further the date at which the plans for future capital investment. In some of official figures, released later this month, major central banks will start to tighten cases, this could mean that some projects are is likely to show blistering growth of around monetary policy. delayed or scaled back as firms chart a 1.5 percent for the third quarter.
16 CREDITSTRATEGY Opinion
With households still in a buoyant mood, A voice for SMEs sponsored by it is clear that the economy as a whole will In sickness register at least modest growth in the third quarter. The Office for National Statistics (ONS) will release its first estimate of GDP and in health growth on October 27. Companies need a finance provider that can cope with Far from the expectations of the Bank of the ups as well as the downs, explains MATT SMITH England and other forecasters that growth would all but stall, instead it seems set to come in at a respectable 0.4 percent, and could possibly be stronger.
A chain reaction Looking into next year, it’s likely that the drag to growth from a downturn in capital expenditure by businesses will be augmented by a slowing in the pace of household spending growth. Consumers are feeling fine now, but a chain reaction that starts with a lower pound, which feeds into a higher rate of inflation, and on to a squeeze on spending power could yet get under their skins. Matt Smith The pound was already softening before Risk and operations director, IGF the referendum, and HSBC expects it will depreciate further to finish the year at around USD/GBP1.20. This scenario is good news for exporters, but not so good for importers, very business goes through a who now face the challenge of passing their lifecycle of highs and lows – and “A reliable finance increased costs on to their customers. each has the potential to be partner should have The upshot is that the annual rate of extreme. As such, it makes sense consumer price inflation will accelerate more Eto have a flexible funding source that can the business acumen to quickly than if the referendum produced a accommodate whatever challenges come understand this dynamic vote to remain. their way. With average earnings expanding at a Every finance provider will be familiar landscape and reflect it in subdued annual pace of not much more than with the tell-tale signs of a business their offering” two percent, it’s quite possible that come approaching a downward slope, most notably this time next year inflation could again be the deterioration of financial information running ahead of earnings growth, meaning through what is being reported, delays in that many people will be worse off in submitting papers, or just going silent. real terms. In these instances, a provider has to work Their incomes will still be expanding, but hard and sensitively ask the right questions their spending power will be declining. and extract the required information. Of It’s under those circumstances that course, building a strong relationship with consumers will start to pull in their horns customers through personal service and an again. With household expenditure in-depth understanding of the client’s needs contributing around two thirds of the UK’s will help avoid these potential difficulties in GDP, what happens to consumers will be the first place. In some instances, finance providers will critical in determining the severity of the Businesses that have a trusted relationship be able to spot signs of trouble before their post-Brexit slowdown. with their finance provider are normally client. At this point, the right provider can So what will matter over the coming one much more comfortable having difficult provide extraordinary value by sharing the to two years is the extent to which conversations and volunteering tough information and expertise with their client in businesses cut back on capital spending, information. As such, companies should look order to avoid any major business problems. and the extent to which a depreciation of for evidence that a provider will not just This flexible approach can also help a sterling and higher inflation prompts respond with a knee-jerk reaction, but business to benefit from increased finance consumers to retrench. instead listen to them carefully, consider options as the company grows, such as an A recession looks to be unlikely, but a their best interests and support them through extension in facilities or even an introduction noticeable slowdown is definitely on the the good times and the bad. to mainstream finance, which may have cards for 2017. Ultimately, every business is on a winding previously been unobtainable. Hopefully, it will be short lived, with the road, and likely to encounter a few bumps Whatever stage in the business lifecycle a annual rate of inflation falling back again in and crashes along the way. However, for company may be, there are always financing 2018. What happens then, especially to the most part, few companies experience a options available. business sentiment, will depend crucially on total write-off; a reliable finance partner However, these can best be identified whether the process of exiting the EU has should have the business acumen to when a finance provider understands the produced some certainties about the understand this dynamic landscape and market and has fostered an open and honest post-Brexit landscape. CS reflect it in their offering. line of communication with their client. CS
creditstrategy.co.uk 17 Opinion
A little less conversation, more co-ordinated action please At the CSA’s conference last month, it took broadcaster Andrew Neil to point out a gaping hole in co-ordinated attempts to help indebted customers – particularly the most vulnerable. JOHN RICKETTS reports on a lively panel session
John Ricketts Vice president, Credit Services Association (CSA)
oo much game planning and not enough action’ was the “The UK Regulators Network’s role was explored, accusation levelled at experts with Andrew Neil pointing out that in the two years at the UK Credit and since it was formed it had done little beyond issuing a ‘CollectionsT Conference (UKCCC) by the event host, Andrew Neil, last month. leaflet which no one would have read” Neil was specifically directing his comments to panellists taking part in one of two showpiece debates, examining how the refusing help, even when it was offered. to solve the conundrum of whether a three elements of vulnerability, mental One panellist argued that society still single regulator for debt collection was health and debt collection fit together in thinks that it’s good to make people feel bad a viable option. today’s compliance-focussed environment. about being in debt, but that the problem was Neil was again on form in drawing out The experts, comprising senior executives not insurmountable. All agreed that much the best from the experts, which on this from The Money and Mental Health Policy wider stakeholder engagement (ie with occasion pitched representatives from Institute, OFGEM, Joseph Rowntree health professionals, debt collection Ofwat and Energy UK against a consumer Foundation, the Money Advice Trust, the agencies, debt advisors, local authorities, and champion and me. CSA and The University of Bristol, were policy makers) was urgently required if the While the essential service regulators pressed on what progress they had made in desired step-change was to be achieved. insisted that they demanded the highest addressing and overcoming the issue of standards from either in-house or external managing the most vulnerable of customers Room for requirements collectors, it was only towards the end of in debt, including the very poor. Part of the problem, and a theme that ran the debate, and when pressed hard by Neil What became clear was that every one across both of the panel debates, was the and another pertinent question from the of the organisations represented had worked lack of agreed best practice and regulation floor, that they agreed that a more consistent hard on the issue in isolation, but a clear lack for all forms of debt collection. approach was not only required but should of collaboration and co-ordination of those Whereas the CSA could rightfully point to be accelerated. efforts was potentially hampering progress. its code of practice, and the Financial The role of the UK Regulators Network Indeed, when pressed further on Conduct Authority (FCA) could highlight its (UKRN) was explored, with Neil pointing suggestions that any “real progress” was authorisation for agencies collecting out – somewhat witheringly – that in the being made at all, it took speakers from the financial services debt (i.e. debt that two years since the network was formed it floor to come to the experts’ rescue. stemmed from a consumer credit agreement had done little beyond issuing a leaflet They reported that recorded calls, call and previously regulated by the OFT), which he said, no-one would have read. analyses, internal and external audits, and certain parts of the ‘collections’ world were The panel agreed – perhaps for very specialist teams were all contributing to not subject to the same levels of scrutiny. different reasons – that the same principles identifying and supporting the most This was especially true of local and practices should apply to all debt and vulnerable customers, and delivering authorities and government debt – i.e. money all consumers. tangible, measurable results. owed to public sector organisations such as The hurdle, as I identified, was that it Everyone agreed that the stigma of debt, HMRC that appeared to be governed by required a change in law, and I did not and the stigma of mental health, still needed different rules. In these cases, treatment of hold out much hope of a speedy to be addressed, and it needed to be customers was, and still is, far from resolution. The government, it seems, recognised that some customers were universal, and this was put to another panel has other priorities. CS
18 CREDITSTRATEGY Opinion
The dynamic of trust and affordability Payday lenders recently faced familiar criticisms over the quality of affordability checks. STUART HOWARD explains how the industry can build trust by serving specific needs responsibly
Stuart Howard Chief executive, Dollar UK
ne of the more serious charges levelled at the short-term credit “We acknowledge that many - though by no means industry is that affordability – all - our customers lead lives where the solid and the measures put in place to predictable regularity of a monthly pay cheque Oestablish whether somebody can afford to repay the loan they are about to take out – doesn’t always apply” has sometimes been cursory. As with all things, the realities were more nuanced, but for those who had asked for change. This demand from the was able to offer expedient small sum loans never had experience of a short-term lender, FCA seemed entirely reasonable. What we rather than long-term finance. So when we the idea that fast could also be rigorous do is based on trust and our practices have to lend we bear in mind one overarching was incomprehensible. inspire a belief that we operate with the best affordability principle ‘will this loan bring The algorithmic checks, credit scoring interests of the customer at heart. our customer peace of mind or a problem?’. and cross-referencing should surely take What that meant practically was stepping It addresses a simple point. Is taking out time to be effective? back and looking again at the definition of a loan needed and affordable not just It was a view rooted in an old-fashioned affordability; the customer’s ability to afford immediately but several months further understanding of financial services, one of a loan rather than the company’s credit risk down the line? If there is anything that hushed banking halls, letters and memos in lending in the first place. suggests that it is not, the loan may not and a slow, steady, pre-technology That places the onus on lenders to look be made. financial world. carefully at an applicant’s individual That, I concede, is counter-intuitive. The attractions of that somewhat nostalgic circumstances, assess their need and draw Businesses like ours exists in no small part view are clear but overlook the obvious point sensible conclusions about repayment. to help people who are under banked, that the essence of short-term credit is speed Doing that relies on better data, un-banked, suspicious of mainstream finance and access. particularly in relation to income, and we or outright unwilling to take on long-term now place much greater emphasis on credit liability. We are here to help in a way that is Hard and fast demand bureaux and third party information to often overlooked in commentary but When people use services like ours, they validate what we are being told either online explicitly acknowledged in academic studies. tend to want the cash quickly, in response to or at our stores. However, we do our customer base a unexpected need or circumstance. Systems, We now bind in Office of National disservice if that desire is confused with however flawed, served that need and there’s Statistics data to our decision making to being irresponsible or encouraging often nothing more sinister than that. ensure we cast the broadest net for irresponsibility. The sector must thrive. It is But it must be conceded that between relevant information. useful and it encourages financial inclusion genuine rogue operators, the limitations of - but it must do it right and be seen to do so available technology, people’s willingness to Overlooked and under banked if it is to be sufficiently trusted. share information truthfully and, yes, We acknowledge that many - though by no At the heart of that trust issue lies sometimes commercial imperatives trumping means all - our customers lead lives where affordability. judgement, affordability was not the the solid and predictable regularity of a The measures we have taken are the industry’s strong suit. The Financial Conduct monthly pay cheque doesn’t always apply. start not the end, but I have great confidence Authority (FCA) acknowledged that Others simply find bank processes lengthy that they are a step forward. That has to be explicitly in its review of the sector and it or in some way judgemental, even if a bank a good thing for customers. CS
creditstrategy.co.uk 19 Opinion
The future of debt management plans Some pragmatism is needed to re-establish stability in the debt management sector, says JOHN FAIRHURST
John Fairhurst Managing director, Payplan
he last few years have seen a fundamental shift in the debt “While it would be unreasonable to point the finger management sector. of blame at one organisation or constituency, our The world today is one where collective failure to find agreement does not reflect TPayPlan (at the time of writing) is one of only two debt management plan (DMP) well on us as a sector” providers authorised by the Financial Conduct Authority (FCA). More than 150 firms have left the sector and few fee-charging firms are taking on new tensions between fee versus free-to- model which requires regular signposting to cases at any scale. It is an industry in consumer models, or the vulnerabilities free services will remain problematic. disarray that needs stability. inherent in fair-share funding models, and Fixing the DMP model should be possible While all eyes have been on the FCA the these issues continue to limit the service without asking fair-share supporters to pay authorisation process is finally drawing to a available to consumers. more, or consumers to pay anything. This is conclusion. What the post-authorisation about providing a level playing field where environment looks like will soon be clearer. No direction home consumers can always access a free service, Some things seem probable; that free to While almost all stakeholders are dissatisfied creditors can see an end to large fees consumer and fee-charging providers will with the status quo we lack any clear deducted at source and fair-share supporters continue to co-exist and funding models for consensus about the best way forward. Calls can see an end to the cross subsidies they both types of provider will remain an issue. for a statutory debt management scheme, for provide to non-supporting peers. It includes The FCA has helped to establish a baseline example, have received a lacklustre allowing firms operating a fee-charging standard of advice, safeguard client funds reception with limited support for the model the opportunity to move to a free and raise the bar of expectations. For those principle, let alone the detail of a scheme. model if that’s their decision. firms which make it through authorisation, it The responsibility for this lack of We are, of course, always mindful that is time to shift attention from these areas to consensus is a shared one. While it would be fixing DMPs doesn’t necessarily fix wider questioning whether the market is operating unreasonable to point the finger of blame at problems with debt advice services. well enough for consumers and creditors. one organisation or constituency, our Funding remains challenging and there Few would argue the current market and collective failure to find agreement does not are solution gaps for many consumers whose funding arrangements are even close to reflect well on us as a sector. In the absence circumstances don’t fit the available optimal and at Payplan, we continue making of reform we are left with a mixed economy solutions. These are broader issues that the case for more balance in the sector. where some consumers are charged fees and deserve wider discussion but time is against We’ve seen missed opportunities to bring some receive a free service depending us and if we insist on waiting for a holistic about meaningful change. For example, mainly upon where they access advice. solution we risk events overtaking us. implementation of debt management Despite the unsatisfactory operating No-one can predict the next big surge in provisions in the Tribunal Courts and environment, we believe DMPs remain a demand. There’s a risk this will happen Enforcement Act 2007; work on the valuable option for many consumers. In the when the sector lacks the resilience and Insolvency Service-led DMP protocol absence of significant sector change we scalability to cope. between 2011 and 2013; and a BIS select believe the ability of fair-share providers to Pragmatically we need to resolve some committee enquiry into debt management. meet a significant rise in demand will be of these difficult issues quickly. DMPs seem None of these resolved fundamental limited. The operation of a fee-charging as good a place as any to start. CS
20 CREDITSTRATEGY Opinion
Can PR drive high quality editorial? Last month, FRED CRAWLEY outlined failures in communication among PR agencies. Here he goes head to head on comms with SEAN FEAST, who manages PR for many organisations in the industry
Head to Head
Sean Feast Director, Gravity London
es. A good PR is a match for any specific skills and sector understanding, and by the immovable force of compliance. journalist, and just as good at deploying the wrong account teams Much as the CIPR wishes to present our identifying story ideas or trends accordingly. The prevalence of online media occupation as a ‘profession’, how many that add genuine value to an prepared to upload any and all content has communications directors have a seat on the Yeditor’s thinking. also led to a further dumbing down and a main board? A good PR working with a good client (ie belief that PR can be given to anyone in an The fact I am even having to ask such a one that actually values what you do) can office who ‘likes to write a bit’. question shows how much work the PR provide a depth of knowledge and insight Some firms have fallen into the trap of world still has to do. that delivers true thought leadership, and in writing a release as though they are painting Good PRs understand their clients, and doing so elevates the editorial content. by numbers, but the best PRs present the industry in which they work. They Certainly there are issues. Some material in a way that a journalist might immerse themselves in it. They get to know journalists see PRs as a barrier to write up their story. It is most gratifying to the sector journalists well, and build a information, not a conduit to a better story, see a piece you have written go into a relationship based on trust and mutual and that doesn’t help. But the PR industry is national newspaper, virtually unchanged. respect. This allows them to discuss and also to blame for failing to grasp the Poor quality is not, however, always the explore ideas openly, and that in turn drives importance of trade PR, which requires very PR’s fault; sometimes we too are confronted a higher quality of editorial output.
Fred Crawley Consulting editor, Credit Strategy
et’s start by defining ‘high as I have described - eg content with space requires a shrewd instinct for quality editorial’. potential to give readers a commercial edge. divulging just enough. I was taught that in business-to- On the right we’ve got PR - content which, Give away too much commercially business publishing, every article by nature, has been produced to further the sensitive information and you risk Lshould give the reader information which aims of businesses that commissioned it. undermining the point of producing PR in will directly impact their ability to make a What can exist in the intersection of these the first place. Give away too little, and you profit - whether that means giving them more two circles? Copy which serves the aims of a end up with anodyne fluff that nobody in insight into their customers, their commissioning business, but which also their right mind would publish. competitors, or their trading environment. contains information of commercial Getting this balance right - and I suspect Shakespeare himself could have written it, significance to potential competitors, this is where my opinion may converge with but unless a reader can pick it up and use it partners and customers. Sean’s - depends on the skill and experience to inform their strategy, it’s not providing There is potential conflict here: as I said of your PR resource. They need a deep return on investment. last month, the information the market most understanding not only of what you want to With that in mind, let’s construct a wants from a business is usually the communicate, but of what your market wants venn diagram. information it is most reluctant to divulge. to know. If they can align those objectives, On the left we’ve got “quality editorial” As such, producing copy in this crossover you’ve cracked it.
creditstrategy.co.uk 21 Cover Story Identity Fraud
IDENTITY
THEFTAs identity theft soars nearly 50 percent year-on-year, large corporates are being warned about data security. Amid TalkTalk’s fine for exposing customers to a cyber attack, and Yahoo’s admission that 500 million accounts were hacked, there are questions around whether creditors truly know their exposure. AMBER-AINSLEY PRITCHARD investigates
re creditors, from big banks to in the past 18 months, is another similar, sponsored actor”. The company said there is utilities and telecoms firms, eye-watering discovery imminent? no evidence to imply the “state-sponsored doing enough to prevent identity Might several big creditors be oblivious actor” responsible is still in the network, but fraud and reduce the exposure to the scale of identity fraud now being confirmed that it is still working closely with Atheir customers face to cyber crime? committed against their customers? The law enforcement agencies. In a recent study Experian said around notion is becoming less far fetched. It added that the hacked accounts suggest £10bn of identity fraud has been committed Yahoo’s own investigation found that no payment card data or bank details were against individuals in the past year. the accounts had been hacked by a “state- stolen. However, names, email addresses, Research from Cifas, a not-for-profit telephone numbers and passwords may have company working to protect businesses, been pilfered. charities, public bodies and individuals from In response to Yahoo’s breach of data the financial crime, also found that identity information commissioner, Elizabeth fraud cases soared to 170,000 cases in 2015 Denham, says: “The vast number of people from 114,00 in 2014. 15 affected by this cyber-attack is staggering In stark terms, the Cifas figures show that The frequency of seconds and demonstrates just how severe the cases of identity theft have increased by each day that an act of financial consequences of a security hack can be.” nearly 50 percent between 2014 and 2015. fraud is committed She adds: “There is a sobering and After Yahoo’s discovery that 500 million important message here for companies that accounts had been hacked way back in 2014, acquire and handle personal data.” the subsequent debate has focussed on why Source: Many readers may already know the Financial Fraud Action UK such a large corporation is only just finding techniques behind identity fraud, which out about a colossal cyber attack. With typically involves fraudsters developing banks’ systems failing quite openly to attacks malware software and fake websites to
22 CREDITSTRATEGY Cover Story Identity Fraud
IDENTITY THEFT
create a veil of reality to trap consumers. Whether it’s complacency or a plain Fraudsters then obtain personal data through lack of knowledge across vast numbers MORTGAGE FRAUD the use of phishing and vishing attacks of consumers, there are studies that show before selling on the information or using it some individuals are leaving themselves Another growing concern linked to to buy products and services, or obtain credit open to attack. identity fraud, is mortgage fraud. and debit cards. Phishing is an electronic Comparethemarket.com recently A study from Experian found that mortgage fraud is at its highest technique used to obtain usernames, commissioned a study by Populus, a level since 2012. passwords and data whereas vishing does research agency, which surveyed more than The credit reference agency used the same thing but by cold calling. 2,000 people about the risks and frequency data from the financial services of fraud. The survey found that a quarter of organisation National Hunter and No room for complacency people use the same pin and password for all found that the number of fraudulent applications of Whatever techniques are deployed, perhaps cards and online accounts. mortgages in the first quarter of another danger for creditors, particularly The study also discovered that one in this year was six percent, the banks, is customers’ complacency over being every 10 people had been a victim of a highest recorded figure in the past reimbursed if they become a victim. cyber attack on their credit or debit card in four years. It also said that for every 10,000 More than 2,000 people were surveyed by the past year. mortgage applications in this time a study carried out by YouGov at the John Marsden, fraud and identity expert period, 66 were fraudulent. beginning of this year. at Equifax, said: “There is a significant Experian added that there has The survey found that although many knowledge gap amongst customers in been an increase of fraudsters consumers feel they are vulnerable to having terms of identifying safe places to share applying for mortgages with stolen identities and the identities of their accounts hacked or copied, they believe confidential information. people who have recently died. banks will reimburse them if they are tricked “As consumers seek the convenience and into giving out personal bank details. speed offered by digital correspondence ➢
creditstrategy.co.uk 23 Cover Story Identity Fraud
The rise of identity fraud by product
70,000
60,000
50,000
40,000
30,000
20,000
10,000 Number of identity fraud cases Number of identity fraud
Bank account Plastic card Loan Online retail
Source: Cifas Fraudscape 2016 2014 2015
➢ they expose themselves to fraudsters who Contactless be refunded for any unauthorised are discovering new ways to obtain data to Another issue linked to identity theft is fraud transactions, provided they haven’t acted financially exploit individuals.” committed by way of contactless cards. with gross negligence.” Payments made using the contactless Outside banking, other firms were more Online exposure feature of many cards are often processed as forthcoming. Vicky Jones, senior manager of According to Cifas, out of the 170,000 cases ‘offline’ transactions; this means transactions credit and fraud customer payments at of identity fraud recorded between 2014 and are not directly processed with the bank, but energy firm First Utility, says it’s difficult to 2015, 86 percent of identity theft happened at a later point. This enables fraudsters to identify the number of customers that have online. In this context, creditors face the make payments even after the card has been had identity fraud committed against them. challenge, as Experian puts it, that fraudsters stolen because the bank is not immediately On the company’s strategy to prevent are fast, inventive and adaptable. So fast in notified of these ‘offline’ transactions. fraud, she says: “At the point of registration, fact that research conducted in the first half For the industry though, it seems the race when new customers join, not only will we of this year by Financial Fraud Action UK to provide more convenience is paramount. check the risk of affordability but we will found there is a case of financial fraud A spokesperson for HSBC says: “The also verify bank details to check they belong happening in the UK every 15 seconds. contactless facility on bank cards is designed to the customer joining. I don’t know many This is a 53 percent increase compared to the to approve transactions ‘offline’ without (utility) companies, other than ourselves and same period in 2015. referring to the account provider for maybe two others, that have fraud prevention Of course, it’s also executed faster authorisation, for the speed and convenience strategies in place.” online than anywhere else, as consumers of customers.” Jones believes that fraud prevention must live their daily lives through smartphones. Contactless is probably largely regarded not interrupt the customer experience, so Nick Mothershaw, director of fraud and as a success story, but even so, how First Utility uses offline techniques to check identity solutions at Experian, says: “In our are creditors generally protecting data rather than asking customers for lots of latest piece of research Experian found that their customers? paper-based proof. The offline technique the most prolific users of mobile and Understandably, the banks we approached means data is sort through to check if there social technology made up almost a quarter for comment would not go on record on are duplicate identities with either the same of all identity fraud victims in 2015 – in precise activities. Lloyds Banking Group name and email address or contact numbers. spite of only accounting for seven percent says it takes its commitment to fraud Jones says this helps to find out if there is of the population.” prevention “seriously and invests heavily in any identity fraud being committed or even With new banks launching and offering a detection systems”, while Virgin Money says fraud rings. She adds: “Most people aren’t digital-only experience, and incumbents it uses “a range of sophisticated techniques committing identity fraud to pay for utilities investing heavily to improve their digital to prevent and detect fraud.” but are doing so to obtain credit or debit offering, opportunities are growing for However, a director of cyber security at a cards. Although some fraudsters are using fraudsters. But John Cannon, commercial big four accountancy firm indicated that energy bills as a form of proof of identity to director of fraud and identity at Callcredit, Barclays has invested a “significant amount” obtain mobile phones under other identities.” says: “Identity fraud is an issue for all types to educate its team on prevention. of companies, not just banks. A spokesperson for Nationwide Building Education “The behavioural characteristics of a Society says: “We believe combating fraud is Cifas has found there has been a 52 percent normal customer today in some instances a joint effort, between us and our customers. increase in the number of identity fraud would compare well to a fraudster 15 years We also invest in customer awareness victims under 30-years-old, comparing the ago. This is a challenge for banks and any initiatives, for example the current Take 5 years 2014 to 2015. Cifas believes the UK company offering a streamlined digital campaign, which aims to raise awareness education system can play a role in reversing experience to customers.” and understanding, therefore enabling this trend, stating that there is no mention of He adds, however, that advances in customers to avoid becoming victims of teaching online identity protection in the technology are enabling new types of data financial crime. financial education curriculum guidelines. to be verified about the person such as “Customers are protected against With fraud risks gathering in scale, biometrics (facial recognition), behaviour fraudulent transactions on their account by education and awareness might be the or location. sophisticated monitoring systems and will industry’s best weapons of prevention. CS
24 CREDITSTRATEGY Cover Story Benefits Fraud
Benefit fraud: A £1.6bn problem for the government Fraud hits the coffers of central government in often nebulous, complex ways. MARCEL LE GOUAIS takes a top line look at taxpayers’ losses in various departments
verpayments of benefits due to fraudulent claims amounted to “Not all of the £1.6bn in benefits overpayments an estimated £1.6bn in the is lost because the department can recover some 2015/16 financial year. OAs a percentage of the Department of Work of it. In 2015/16, aided by the private sector, the and Pensions’ (DWP’s) total expenditure (about 0.9 percent of £172bn), it’s the department recovered £980m of overpayments” highest proportion for a decade. The figures were published in a DWP report – Fraud and Error in the Benefits System; preliminary data for 2015/16. Another area, where there has been So how is central government tackling such While they’re preliminary, they’re robust in improvements in slashing both the sensitive issues? being based on a sizeable sample surveyed system’s complexity and ease with which A National Audit Office (NAO) report put by the department. fraudsters can attack the system, is tax out earlier this year gives some indication. It As is often the case with central credits. In this regard, ‘fraud and error’, are focuses on aspects of fraud associated with government, the report hides overpayments often grouped together. central government expenditure including behind percentages – we’ve worked them In 2014/15, the latest year for which HMRC and the DWP. out as actual figures. statistics are available, error and fraud losses The report says the exact scale of fraud Such reports are heavy weather but they reached £1.37bn. This is effectively the total within the government is unknown, but do reveal top-line information on potential overpaid due to genuine mistakes or where added that detected fraud was equivalent to losses that ministers are facing in their the system has been played. only 0.02 percent of total expenditure. The respective departments. NAO states in the report that departments They also give an indication of how Universal credit which are focussed on fraud spend most of fraud is being tackled. In the DWP’s case, Still relatively new in the grand scheme of their time investigating fraud that has not all of the £1.6bn overpayments is lost major government changes, universal credit already happened, as opposed to prevention because the department can recover some will eventually replace several benefits with strategies. It added that efforts by central of it. In 2015/16, aided by the private a single monthly payment. In time, things government to detect and measure fraud and sector, the department recovered £980m like jobseekers’ allowance, child tax credit error has focussed on asking departments to of overpayments, an increase of £50m and housing benefit will be subsumed into it. conduct random sampling of high-risk areas. since 2014/15. As the programme is still being rolled A key development will be departments The department also has a battle to fight out to Britain, the figures are relatively low, sharing best practice, assets and resources in taking on fraudsters claiming employment with fraud overpayments to universal credit under the Cabinet Office’s supervision. support and allowance. recipients totalling £27m during the financial Under this, the private sector will play a The same report shows the DWP paid out year 2015/16. massive role. CS just under £250m of this benefit to fraudsters in the same financial year. Pension credit is another area where levels BENEFIT OVERPAYMENTS DUE TO FRAUD are rising, though not quite to the same scale. Between the same period, overpayments of this benefit due to fraud increased to £155m. Benefit type 2015/16 One of the main causes of this was what the Housing benefit £730 DWP dubbed ‘abroad fraud.’ Pension credit £150m This occurs when claimants who are normally resident in the UK fail to notify the Employment and support allowance £250m department before leaving the country, and Jobseekers’ allowance £70m are abroad for a period longer than the Universal credit £27m allowable absence limit.
creditstrategy.co.uk 25 THE HUGH FITZPATRICK CS Chief risk officer INTERVIEW Shawbrook Bank ACCESS ALL AREAS HUGH FITZPATRICK, chief risk officer at Shawbrook Bank, explains to Marcel Le Gouais why unfettered access to his chairman and chief executive is critical for managing risk
hawbrook has often been described understand a little more about where the role since its inception as a ‘challenger is focussed and how it is performed. bank,’ a label given by those who “If I look at my role at Shawbrook and lumped all newcomers into a how that maps to regulatory guidance, the Scatch-all category that didn’t accurately key thing is that I need unfettered access describe any bank within that term. to the bank. I get that in three ways. The Moreover, it’s a bank trying to meet first is that I have an executive reporting specific customer needs in areas that the line to the chief executive and I sit on the more established players are broadly ex-co, so I have direct involvement in retreating from. Shawbrook is steadily day-to-day conversations about the bank’s growing its three main divisions - business strategic decisions. finance, property finance and consumer. All “The second is that I have a reporting signs show it’s doing so from a position of line to the chair of the board risk committee strength. Its latest results for the first half of (BRC), which allows me to escalate to that 2016 show a 14 percent year-on-year rise in committee anything I think is appropriate. underlying pre-tax profit to £38m. This “Thirdly, I have unfettered access to the factored in a one-off impairment charge chairman. So if all else fails, I can go via the of £9m in one office of its asset finance CEO or the chair of the risk committee, or division. This was, however, an isolated the chairman. For me that’s important incident and the results emphasise that the because if I look at the CRO role, in some bank didn’t extend its risk appetite during a respects it’s the conscience of the business. more benign part of the cycle. Hugh Sometimes, people don’t always want to Fitzpatrick explained how this risk listen to their conscience, so it comes down appetite works in practice. to one of the attributes of a good CRO - you need good communication skills. I have to MLG: Tell me about your role and take people on a journey through facts or your responsibilities. storytelling to help them understand why the HF: “In the FCA handbook, under chapter stance I’m taking is at odds with the bank’s. 21 systems and controls, there’s a good “15 years ago, the CRO role was weighted description of a CRO’s responsibility. This much more to credit risk. But during the last is a good starting point for anyone to five to 10 years that has shifted to being➢
26 CREDITSTRATEGY HUGH FITZPATRICK: THE CV
Chief risk officer: Shawbrook Bank November 2015-present
Chief risk officer, UK: GE Capital, April 2015-October 2015 Previously: Head of enterprise risk, UK; chief credit officer
Structured Finance: Burdale Financial, May 2002-May 2003
creditstrategy.co.uk 27 THE HUGH FITZPATRICK CS Chief risk officer INTERVIEW Shawbrook Bank
“The Senior Managers Regime is about active participation in decision making while acting reasonably. So if you disagree with something – disagree with it. Get it recorded”
➢ much more around enterprise risk. responsible for identifying opportunities for “I went to a seminar in about 2010 run by growth’, then you dilute the challenge and one of the big four and the message was ‘if control piece – you can contaminate that.” 100 percent of what you do today is about credit risk, it will be about 25 percent of your MLG: In 2018 the Senior Managers job in four or five years’ time’. People said Regime (SMR) will be extended to ‘that will never happen’, but it happened.” encompass more of our audience. How did you overcome challenges in this area? MLG: So which teams report into you? HF: “We wrapped a project around it with HF: “I look after four or five teams inside the governance and identified everyone bank within the second line of defence. I’ve encapsulated by the SMR. The first challenge got a credit team of around 12 people who for any bank is to ensure a clear linkage have oversight of the credit decisioning and between the job descriptions and prescribed portfolio performance. I then have around 12 responsibilities of those encapsulated by the people who provide group compliance and a regime. At Shawbrook, we sat down with conduct risk framework. those individuals and went through the “I then have a team of what will be statement of responsibilities with them, and around 12 by the end of 2016, which created a governance map. From a process oversees risk and portfolio analytics. They perspective, it was a positive experience. It take the data from the systems, interrogate allowed us to make sure everyone knew that and run stress tests. exactly what they were responsible for and “The remaining balance of my job is how they were accountable. spread across operational risk; so looking at: “It became more difficult with the certified Is the bank following its process? Are the population, which is effectively the managers systems working? Then there’s a wider piece well for being a future CEO should you beneath, who probably would not have had around governance of enterprise risk, so it’s a want follow that direction, but the way the that exposure before. Again, we had to ensure holistic view of the bank. CRO role has changed in this regulatory individuals understood whether they could “If you look at the CRO’s span of landscape, is such that it’s only going to cause significant harm to the bank. responsibility, it’s everything from checking become more and more important.” “Inside the bank, I talk a lot about a paper policy adherence to ‘is the bank funded from the Financial Stability Board which properly?’ It’s also asking the question of MLG: Other CROs have observed the came out in April 2014. This was about what whether the bank is managing its risk growth of the commercial or ‘enterprise an effective risk culture looked like. It had appropriately. It’s very broad.” risk’ element of the role. Has that been the four key pieces. same for you? “The first was ‘tone from the top’, which MLG: So if that’s how the role has evolved HF: “Any bank should have three lines of was very clear that people at the top had to until now, how will it evolve in future? defence. The first line is there to manage and ensure they were giving the right messages HF: “The CRO role today is very similar to own the risk, so it’ll have the frontline sales around risk management. The second is about a CEO role about 10 or 15 years ago, because process and might have some delegation to open communication and challenge. The you’re so heavily involved in the business. do underwriting and portfolio management. SMR is about active participation in decision I get to challenge strategic plans, the budgets “The team I have is the second line, which making while acting reasonably. So if you of the entire business and check opportunities is there to challenge and control, so we will disagree with something – disagree with it. and risks. set the board’s risk appetite. We will have Get it recorded. “You’re speaking to everyone in the oversight over performance of the first line. “The third piece is about remuneration. As organisation, so where could that role go? The third line is internal audit, which part of the SMR, that means ensuring the That’s a difficult question because it’s right provides independent assurance. If you then right behaviours are rewarded. The final point across the bank. Being a CRO positions you say to the second line, ‘you’re now is accountability - that’s a core tenet of an
28 CREDITSTRATEGY effective risk culture. It’s also a core tenet of MLG: How do you try to maintain your the SMR, so the SMR involves in some ways impairments at low levels? taking what should already exist and HF: “I think we do a very good job of wrapping regulatory guidance around it.” managing our risk. We’re very much on the manual underwriting side but you then can’t MLG: Now that individuals in banks are ignore increased risk in the environment on the hook personally, is it harder to because of the EU vote. We haven’t seen attract talent to those senior positions? anything flowing through yet which causes HF: “For the broader (staff) population, I us any concern as a result of the vote. don’t think we’ve not been able to recruit “There are debates around whether there people because of the SMR, but it puts more will be a technical recession in future, but onus on ensuring we recruit the right people. we’ve not seen any change in arrears levels, If you want to work in a bank, be a senior but we’re keeping a close eye on customer risk taker or you want to be a CRO, that’s the behaviour and the external market.” price the pay. You’ve got to say to yourself ‘I’m going to be responsible for the decisions MLG: One element some lenders admit is I make.’ Does it change the way I behave? still a huge challenge, is the management Not directly, though I retain a lot more of the of data throughout the customer journey, decision-making documentation.” is it the same for you? HF: “We benefit from having a relatively MLG: So it has formalised an audit of how straightforward system infrastructure. We decisions are made? don’t have complex, external-facing systems, HF: “Correct, and that’s a good thing. In “We ensure the first-line we have what we need today. But we are terms of committee structures and meetings, team is discharging its prone to the same issue which is, you may it also means that minutes should be read in duties responsibly and that have the best systems, but if the data inside the next meeting. They shouldn’t be taken as them is not fit for purpose, then effectively read – they should be reviewed and everyone it’s looking at vulnerable you have the worst systems. We don’t have a should agree them. That becomes the matter customers and forbearance” significantly automated front-end decisioning of record. So in three or four years’ time engine because that’s not the model. We have when people ask why a decision was made, some of that in consumer, but the model is that’s the document that shows why it was understanding the customer need. made at that time.” “The big banks have got legacy systems and some of those have failed quite openly, MLG: So that’s how elements have but they’ve got lots of historical data so they evolved through the SMR, but how has can map customer behaviour. credit risk and collections evolved? “I am building out my risk analytics team HP: “In 2012, before I was here, the bank’s and will ultimately have 12 people who will group risk function was much smaller. It was “There are larger or more complex cases manage our group risk data analytics, stress just three people – a CRO, a head of where we will be more involved. But it will testing, reporting capabilities and ensure that operational risk and a credit analyst. As we tend to be more in an oversight and our modelling of data is appropriate. We transition through this year and next, we’ll challenge capacity.” have, in certain asset classes, used a end up with about 48 people. So two things low-default portfolio model given our here: One – the bank is investing in group MLG: How important is debt sale to relative age and associated data limitations. risk and two, group risk is seen as a function the bank? We have also used external data to map at the heart of Shawbrook. HF: “We’ve done one debt sale so far, so we into our models. Some processes are “The collection and recovery piece sits are relatively new to it and Leighton leads outsourced (to Target Group), and where inside the first line. We’ve just appointed a that process. The debt sale worked fine for this happens we ensure we have the new collections and recoveries leader us. One of the things I have set up is an appropriate governance and oversight to (Leighton Grew), for the whole bank to enterprise risk management committee manage the data. ensure we have consistency. Leighton has (ERMC). We had two committees before – a been promoted internally. conduct and operational risk committee and MLG: Where do you think industry-wide “My team provides the challenge and a credit committee which were the two risk innovation will come from in future? control. We ensure we’re comfortable committees for management. I wanted a HF: “You could argue that having through both the impairment committee single committee because it does two things. specialist and challenger banks is and day-to-day communication on strategies One; it funnels everything related to risk into innovation by its nature. We have about for portfolios. one committee and two; culturally, it tells 30 products to develop over the next four “We ensure the first-line team is everyone that if any risk needs to be or five years. As we progress we may move discharging its duties responsibly and that discussed, there’s one committee for that. into new areas, but we’ll be careful we it‘s looking at vulnerable customers and “So, when we discussed the debt sale, that don’t step away from a core value of the forbearance. We sit above that (team) and all routed through the ERMC. We talked bank, which is understanding customer write the credit stewardship policy. We pass about it on that committee and the flow of needs and engaging with them. One of the that to the collections and recoveries team information from a management perspective biggest pieces of innovation is that we’re and ask them to implement it. My team was pretty good - it was the first sale we sitting in this room, and I’m employed writes the policies and undertakes gap conducted, the second one will be better. In by Shawbrook, a bank that didn’t exist analysis with the first line to check their terms of exchanging information with the before 2011. There are others; that’s procedures tie back into the policies. buyer, I’ve not heard any negatives.” innovation in itself.” CS
creditstrategy.co.uk 29 HIGH COLLECTIONS 07809 086 908 relationships withourclients. in theUK,andeven prouder ofour High Court Enforcement company We are proud to bethelargest YOU MATTER TO US W: E: [email protected] www.marstonhighcourt.com we we clients receive more when market. We ensure our 45% ofallpayments inthe writs inthecountry and We collect onethird of HIGH COLLECTION collect themoney. RATES
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Appointments
TSB poaches Nationwide’s chief risk officer Kathryn Maclennan Hill Dickinson International law firm Hill Dickinson has strengthened its insolvency team with two new appointments. Kathryn Maclennan has joined as legal director while Richard Da Roza has been regulatory matters. He challenger bank. appointed as associate. Maclennan’s will report to chief executive On Neeta’s decision to arrival at Hill Dickinson takes the size Paul Pester. leave, Pester said: “Neeta of the insolvency team to seven. Pester said: “This is an has made an outstanding Bringing expertise in contentious Iain Laing important time to be joining contribution to TSB, where bankruptcy and complex IVA cases, Chief risk officer TSB where Iain’s strong she has created and led a Maclennan successfully represented the TSB experience in retail financial world-class risk function, debtor in the landmark case of Green v services will be essential in and played a valuable Wright which is due to be heard in the TSB has announced the supporting the strategic role to the business in her Court of Appeal later this year. She will appointment of Iain Laing development of TSB to capacity as member of be based at the firm’s Manchester office as its new chief risk officer provide better banking to all the executive.” but will service clients nationally. (CRO), following current UK consumers, not least as Atkar said: “I’ve Da Roza qualified as a solicitor in CRO Neeta Atkar’s decision we progress our IT thoroughly enjoyed my May and will help the team on to leave the business. migration plans. time at TSB. I’m proud contentious matters. Laing, who joins from Laing said: “I’ve been that we have been able to Nationwide Building Society watching TSB’s progress build such a successful Carol Price where he has held the CRO for a while now. I’ve been yet sustainable and Walker Love position since 2011, is now on so impressed by what has controlled bank which Enforcement agency Walker Love has gardening leave and starts in been achieved, and I’m gives customers the made three appointments as the business March next year. Julia Dunn really looking forward to experience they deserve.” expands in Scotland. Carol Price, is now Nationwide’s chief getting started.” A spokesperson for formerly operations senior supervisor risk officer for the group. Atkar has been TSB’s Nationwide said: “Iain and whose service with Walker Love Laing’s responsibilities at CRO and member of the joined Nationwide five spans more than 30 years, has been TSB will include leading the bank’s executive committee years ago. During his time appointed change manager. bank’s risk appetite, strategy since the bank launched in at the society, he developed She will coordinate all aspects of and regulatory framework, 2013. She played a key role a strong, professional and major change in the business, as Walker and advising the board and in the build, launch, IPO and respected risk function. We Love creates a new service delivery executive on risk and establishment of TSB as a wish him well.” centre in Paisley. Andy Fraser, who has been with the company for six years and Shawbrook appoints LendInvest hires brings extensive collections call recoveries director Amigo Loans director experience, will assume the role of training manager. Lastly, following a 30-year career with HMRC, Moira Morrison also joins the business as compliance and oversight manager.
Andrew Casey Ultimate Finance Leighton Grew Willem Wellinghoff Ultimate Finance has strengthened its Director for collections, recoveries and Vice president of compliance asset finance division with the restructuring, Shawbrook Bank LendInvest appointment of specialist lender Andrew Casey. Having worked at both Lloyds Shawbrook Bank has announced that LendInvest, the peer-to-peer platform and NatWest in asset finance, he joined Leighton Grew has been promoted internally for property lending and investing, has Close Brothers before moving to to the role of director for collections, hired Willem Wellinghoff as vice president Paragon Bank. recoveries and restructuring. Grew has of compliance. Although Casey has specialist extensive experience in collections and He joins from guarantor lender Amigo knowledge within the print sector, he operations roles within major banks. Loans, where he held the position of has provided asset finance and Previously, he was portfolio manager for compliance and conduct risk director. refinancing solutions across all industry personal loans and joint ventures at Lloyds Still a special advisor to the board at the sectors. From his base in north Banking Group. He’s now responsible for a Credit Services Association, Wellinghoff is Lincolnshire he will be covering the consistent approach to collections, recoveries also the former head of legal and regulatory east of England from Newcastle down and restructuring across Shawbrook’s affairs, and group legal counsel, at Cabot to Norwich. property, business and consumer divisions. Credit Management.
creditstrategy.co.uk 31 Streams: Utilities & Telecoms
In a league of their own
At the St John’s Hotel in Solihull last month, guests from the water, energy, telecoms and debt collection industries came together for the Utilities & Telecoms Awards 2016. AMBER-AINSLEY PRITCHARD reports
Energy Team of the Year winner EDF Energy
he Utilities & Telecoms Awards AWARD WINNERS FOR 2016 remains the only event that champions best practice in Best Use of Technology Award credit risk and collections in Winner: Court Enforcement Services both sectors. T Energy Team of the Year At this year’s event in Solihull, some of the big winners included EDF Energy, Winner: EDF Energy Sponsored by Orbit TalkTalk Business, Tesco Mobile, First Utility and The Sigma Financial Group. Telecoms Team of the Year The work that goes unsung in the credit Joint winners: TalkTalk Business and collections teams of such businesses and Tesco Mobile would otherwise be overlooked, if it Sponsored by Lowell Group wasn’t for our annual event that recognises Water Team of the Year those leading the pack when it comes to Winner: Thames Water – customer treatment. Bill to Cash Team But there’s more to the night than trophies. Sponsored by Marston Holdings This year the guests helped to raise more Best Outsourcing Initiative of the Year than £2,500 for the Anthony Nolan charity. Winner: Scottish Power and They were also entertained by magician The Sigma Financial Group Spencer Wood and award-winning Irish comedian Rory O’ Hanlon as host. Innovation of the Year Winner: British Gas The awards scheme, sponsored by Court Sponsored by Court Enforcement Enforcement Services, Lowell Group, Orbit, Services Marston Holdings and Moriarty Law, is now Winners Severn Trent - Care & Assistance Team in its sixth year, so for 2016 the guests saw Best Joint Customer Service Initiative of the Year for the first time our new branding for firms debated regulatory scrutiny, fraud and Winner: First Utility and utilities and telecoms. This comes shortly occupier debt. See p10/11 for a full report on The Sigma Financial Group after the relaunch of Credit Strategy the conference. At the end of the conference magazine and before our website relaunch the Utilities & Telecoms Top 50 was Best Vulnerable Customer Support Team later this year. Winner: Severn Trent – announced. The top 50 (see overleaf) Care & Assistance Team The night was preceded by the seventh recognises the senior professionals who’ve Sponsored by Moriarty Law Utilities & Telecoms Conference on the same had the most positive impact on the credit day, in which speakers from OFWAT, and collections function, within the utilities OFGEM, British Gas and many more major and telecoms sectors, in the past year. CS
Awards sponsors:
32 CREDITSTRATEGY Streams: Utilities & Telecoms They’ve got the power: The U&T Top 50 Championing the key influencers on credit risk and collections practice in both sectors, Credit Strategy announced the second annual U&T Top 50 after the Utilities & Telecoms Conference. Here’s who made the final list
he second Utilities and Telecoms Top 50 recognises and celebrates the leading professionals who, within the last 12 months, have Thad a positive impact on the credit and collections industry. Nominated in part by credit and collections professionals themselves, the list includes a wide range of well-known names from across the water, energy, telecoms and debt collection sectors. Below is the final list in full.C S
U&T TOP 50
Zoe Ackland Max Griffiths Sue Lindsay Phil Shaw Head of Credit Risk, Debt and Director of Credit and Collections Head of Consumer Affairs Director, Customer Service and Sales Fraud CENTRICA WESSEX WATER Operations TALKTALK E.ON Andrew Hancock Allan Machesney Fiona Bailey Head of Customer Services and Customer Debt Solutions Tim Sheer Head of Income Revenue Management – Field Operations Head of Billings and Collections UNITED UTILITIES EDF ENERGY E-ON YORKSHIRE WATER
Dr Tony Ballance Annette Hardcastle Andrew MacRae Michelle Simpson Director of Strategy and Regulation Head of BGR Debt Operations and DTH Collections Manager Head of Customer Billing Services SEVERN TRENT WATER Operational Support BSKYB SOUTHERN WATER BRITISH GAS Steve Banks Simon Markall Ranjit Singh Head of Domestic Credit Risk Luke Harrison Head of Public Affairs Lead of Customer Risk Management RWE NPOWER Agency Relationship Manager OFWAT EE OPUS ENERGY Adrian Betts Karen McKenzie Colin Smith Senior Risk Strategy and Credit John Hegarty Head of Collections and Payments Head of Collections Outsource Manager Credit Risk Manager VIRGIN MEDIA SSE VODAFONE UK SSE Phil Mead Andrew Springall Lisa Connell Sarah Henry Head of Credit Strategy Head of Customer Experience Customer Manager (Debt Recovery) Agency Manager Domestic DIXONS CARPHONE CO-OPERATIVE ENERGY NORTHUMBRIAN WATER Debt Operations SCOTTISH POWER Amber Morton Paul Stretton Mark Carroll Head of Credit Management Head of Debt and Credit Head of Credit Risk Spencer Hough BUSINESS STREAM EXTRA ENERGY EIR Head of Billing and Collections ANGLIAN WATER Lynn Parker Meghna Tewari Joel Chapman Director of Consumer Protection Head of Consumer Vulnerability Head of Regulation and Geraldine Iwin OFCOM Strategy Compliance Head of Billing Revenue and OFGEM BES UTILITIES Collections Ian Parry NORTHERN IRELAND WATER Head of Credit Operations Rachel Vincent Zuned Choudhury FIRST UTILITY Head of SME Customer Service Corporate Credit and Collections Brian Jackson NPOWER Operations Manager Director of Credit and Collections Tracy Porter VODAFONE UK BRITISH GAS Head of Collections Jason Walkingshaw EE Head of Employee Engagement Anne Curran Leyton Jones OVO ENERGY Head of Contact Management / Industry Operations Director Simon Potts Consumer Collections OVO ENERGY Group Head of Fraud Management Trafford Wilson VIRGIN MEDIA and Revenue Assurance MD, Customer Service and Vicky Jones LYCAMOBILE Transformation Mike Elliot Credit Risk Manager – Customer BT Director of Customer Operations Payments John Preston H3G FIRST UTILITY Head of Billing, Collections, Risk Gareth Wood and Assurance Head of Billing and Collections Jo Frisby Emmanuel Laffont TESCO MOBILE SCOTTISH AND SOUTHERN ENERGY Specialist Recoveries Manager / Head Head of Credit Risk of Specialist Recoveries EVERYTHING EVERYWHERE Amanda Scovell BRITISH GAS Cash and Debt Manager Mike Latta THAMES WATER Head of Credit Management CORONA ENERGY
creditstrategy.co.uk 33 Streams: European Debt Sale
How to solve Italy’s impasse on NPL pricing At the fifth annual International NPL Meeting in Venice last month, investors, Italian banks, investment funds and servicers debated the pricing gap hampering portfolio sales. The country’s banks have some bitter pills to swallow, writes MARCEL LE GOUAIS
Marcel Le Gouais Editor, Credit Strategy
uring the summer months there overall, the banks’ NPL ratio increased from were several speculative, albeit 4.9 percent in 2008 to 18 percent in 2015. informed pronouncements on So that’s the extent of the problem, but whether Italy’s non-performing interest and indeed activity from investors Dloan (NPL) problem was about to erupt. has not yet yielded a so-called eruption. As Credit Strategy reported in its March At the event Giovanni Bossi, chief CDSP Conference issue, all the ingredients are bubbling under November 24, Midland Hotel, Manchester executive of Banca IFIS, said: “The response the surface, starting with €340bn-€360bn of cdspconference.co.uk #cdspconf from investors is not to be taken for granted. NPLs sitting on the balance sheets of Italy’s Call Michael Stanton for sponsorship Even if deals were to increase five-fold biggest banks. queries on 020 7940 4812. For bookings between now and 2017, the volumes would Italy’s NPL levels are three times the EU call Vyvy on 020 7940 4821. still not be sufficient enough to solve the average, and this fragile position has formed problem of Italian banks’ NPLs. against a backdrop of an economy showing a More than 500 people from investment “What is needed is a quantum leap in the weak growth rate and a prolonged fall in funds, banks (Unicredit and Intesa management of impaired assets. The house prices. Sanpaolo), servicers and other firms debated financial capacity already exists; investors’ But so far, an eruption worthy of Mount measures that could help accelerate the level interest is connected to institutes’ willingness Vesuvius is hardly evident. More generally of NPL transactions in Italy, and improve the to render their assets transparent and to not the signs as yet show that if anything, management of NPLs. be intransigent about prices.” Italy’s NPL market will slowly but surely Among the speakers was Roberto Addressing how to close the pricing gap, gather momentum. Nicastro, president of the four ‘good banks’ panellists drew out the following remedies: There are of course many reasons why, in Italy, along with a strong British-based • Investments in skills to manage banks’ with the cumbersome court processes in Italy contingent including Arrow Global’s founder NPLs effectively; being just one. Repossessions can take up to Zach Lewy and Nick Ollard, director of • Better quality of documentation and a decade and according to research by global asset sale services at TDX Group. portfolio segmentation; European consultancy firm Ecorys, Italian Hoist Finance, PRA, Kruk and Lindorff also • Shorter credit recovery times; bankruptcy proceedings last an average took part in roundtable discussions. • Improved technology for credit recovery; of 7.8 years, compared to an average of One of the presentations, using figures • Creation of joint ventures between banks about two years for the rest of Europe. sourced from the Bank of Italy, demonstrated and specialised structures; Another vital point of impasse is a gap in the colossal scale of NPL challenges Italy’s • A revival of Italy’s property market. expectations over pricing. This was one of banks have to solve. Banca IFIS remains a key player in the themes that emerged at the International It showed that in 2008, Italy’s banks were bringing together investors, servicers and NPL Meeting in Venice on September 16, holding onto a gross stock of €87bn of banks. The head of its NPL division, Andrea organised by Italian bank Banca IFIS – NPLs. This total increased 287 percent to Clamer, will be speaking at our CDSP which itself buys and sells NPL portfolios. reach €337bn in 2015. This means that Conference in Manchester this November. CS
CDSP Conference sponsors
34 CREDITSTRATEGY Streams: Car Finance
The dark horse of car finance The largest non-manufacturer car finance provider in the UK, Black Horse recently posted a 30 percent increase in lending for the first half of 2016. In a Q&A with its MD, FRED CRAWLEY gauged the mood at the Lloyds subsidiary
Richard Jones Managing director, Black Horse
FC: You’ve just done your first year FC: Do you have any concerns around at Black Horse - what were you commissions disclosure? doing beforehand, and how did RJ: “In the long run, whether we introduce it that prepare you? mandatorily or voluntarily, we will need a RJ: “Most recently I was with Scottish level playing field on how it’s done - for Widows, where I had spent nearly 15 years. example, so people don’t find ways to hide The businesses I worked with there, like commission elsewhere in a deal. pensions and life insurance, are very CONFERENCE “There has also been a valid point raised heavily regulated - that gave me a good CAR FINANCE by the industry, that we need to be careful grounding for moving into a market with not to make commission so prominent that increasing regulation.” Spring 2017 customers don’t see the total value of deal. “Although I’m relaxed based on what I FC: What have you found surprising have seen in insurance, I still know there or new about the market Black Horse could be unintended consequences. It’s works in? something we need to discuss more as an RJ: “Black Horse is quite unique even in a FC: How do you feel that regulation industry, and having recently joined the group with the breadth of Lloyds Banking around commissions disclosure is Finance and Leasing Association’s board, it’s Group – it really is a business in its own changing life for dealers? a discussion I’m keen to develop. right. A huge aspect of that is the dealer RJ: “I’ve worked in markets where it’s been “You have to keep moving the agenda culture. I’ve worked in other intermediated the standard for a long time - and I think if it forward - regulation is necessary, but in and markets, but here I’ve really enjoyed came in it wouldn’t make a difference to this of itself is never sufficient for change. We interactions with the trade. It’s full of people industry. After all, customers expect dealers all need to work together, so we can be who are down to earth, firm and fair.” to be paid for finance sales. done with it. “We do customer monitoring on behalf of FC: How do you feel Black Horse fits in our dealers; in the last year we’ve spoken to FC: Black Horse has got a lot of attention the ongoing debate of offering finance 4,500 customers, and we feed back what we over the last year for technological and directly to consumers? hear to our partners. process innovation - how does that mesh RJ: “Our identity is very clear – we are an “One of the things we asked customers is with the business being the size it is? intermediary lender. Lloyds may lend whether they were told by dealers that RJ: “We have a real focus on agility. While directly to consumers, but that isn’t a Black commission was present in the deal. The we’re big, we always try to act like we’re not Horse thing. My focus on digital is around results were good – the vast majority were when it comes to changing things. For the dealer journey, and on the customer told. For those customers who weren’t, we example, with the implementation of experience. At the moment more than 80 asked if they would have reconsidered the Consumer Contract Regulations, we moved percent of car finance is sold through dealers, deal if they had known we paid the dealer. quickly to an APR-led model. That said, and I don’t see that changing so long as Only one customer said yes. I think it’s we’ve still got a big infrastructure and it can dealers keep their offering totally relevant to possible we could get unduly concerned take time to get things done – so it’s as much how customers want to buy cars.” about something customers just don’t mind.” about forward thinking as persistence” CS
creditstrategy.co.uk 35 Streams: CCS Awards
Leading the pack in collections and customer service This month Credit Strategy revealed the full shortlist for the Collections and Customer Service Awards, which this year features the public sector more prominently than ever
ome 45 finalists are in the running this year in 12 categories for the Collections & Customer Service Awards. SIn its 10th year, the scheme has seen an influx of entries across a diverse range of existing and new categories. In particular, categories such as Vulnerable Customer Support Initiative, which has been split into two sub-categories of ‘creditor’ and ‘non-creditor’ features some of the UK’s largest financial services and utilities firms. This year it includes Barclaycard and British Gas as well as debt purchasers, debt counselling firms and peer-to-peer companies, such as Zopa, Cabot Credit Management and StepChange Debt Charity. The public sector is well represented with entries from local and central government. The line-up for Public Sector Collections Team of the Year includes HMRC’s Accelerated Payments Team - a new standalone operation dedicated to recovering debts incurred by the use of conduct, it is perhaps no surprise that centres. They and all finalists will discover tax avoidance schemes. this scheme has reinvented itself several who takes home the trophies in front of Meanwhile, the Cabinet Office has times both in name and in terms of hundreds of guests at the Midland Hotel, nominated Indesser – the joint venture categories on offer.” Manchester, on November 24. between the government and TDX She added: “This year is no exception, and Once again, the awards night follows Group which works with the DwP, Home we are delighted to see entries in abundance the Collections, Debt Sale & Purchase Office, HMRC and Student Loans from the largest creditor, the government, Conference during the day at the Company to optimise debt recovery for whose departments last year stepped up their same venue. central departments. North Warwickshire use of the private sector to help solve the This year the conference has more than Borough Council has also made the multi-billion pound debt problem.” 30 speakers and features a UK as well shortlist with an innovative approach to In keeping with previous years, the 2016 as a European debt sale and purchase financial inclusion. judging panel features Britain’s biggest stream, reflecting the continuing trend Kamala Panday, publishing director at banks such as RBS, HSBC and Santander, of UK debt purchasers becoming more Credit Strategy, said: “After a decade along with MBNA, National Australia pan European. Speakers reflect both UK symbolising best practice in a sector marked Group, Tesco Bank, Vanquis Bank and the creditors such as Scottish Power and by change, from the creation of the UK debt Credit Services Association. Yorkshire Bank as well as European sale sector, to the end of self-regulation and Other new categories include awards that lenders such as BNP Paribas, Deutsche resulting overhaul in approaches to customer recognise those operating within contact Bank and Banca IFIS. CS
Award category sponsors:
36 CREDITSTRATEGY Streams: CCS Awards CCS Awards 2016: The finalists
Agent of the Year James McShane, HM Revenue & Customs – Debt Management Telephone Centre Laura McLean, HM Revenue & Customs – Debt Management Telephone Centre (DMTC) Livingston Liz Bann, British Gas
Best Conduct & Compliance Culture Sponsored by Lowell Group 1st Credit GM Financial Idem Capital
Best Customer Service 1st Credit Credit Management Group UK GM Financial MMF Debt Purchase Phoenix Commercial Collections The Keith Jones Partnership Zopa International NPL Expetise – Company Tax Credits Best Legal / Judicial Services Provider PRA Group HMRC Liverpool Debt Technical Office – drydensfairfax solicitors Arrow Global Lowell Solicitors Team 3G South West London Law Centres Marston Holdings Public Sector Collections Team of the Mortimer Clarke Solicitors, part of Cabot Year in Association with LACEF Debt Advice Provider of the Year Credit Management Group Debt Market Integrator Programme Debt Advisory Line The Keith Jones Partnership Team, Cabinet Office and Indesser Money Advice Trust HMRC Accelerated Payments Team South West London Law Centres Best Technology North Warwickshire Borough Council Cashpundit Microsoft Vulnerable Customer Support Initiative Themis Global CCS AWARDS 2016 – Creditor IWOCA Sponsored by Phillips & Cohen Zinc Group – powered by Enghouse Associates UK Interactive technology Barclaycard British Gas Charitable Initiative of the Year MYJAR Sponsored by Marston Group Zopa Dollar UK Shop Direct 24 Nov 2016 The Midland Hotel, Manchester Vulnerable Customer Support Initiative ccsawards.co.uk – Non-creditor Contact Centre Team of the Year For table bookings call Vyvy Cabot Credit Management (Cabot) HMRC Debt Management Telephone on 020 7940 4821; for sponsorship Debt Advisory Line Centre, Livingston queries call Michael Stanton on 020 7940 4812. Idem Capital HMRC Liverpool Debt Technical Office – StepChange Debt Charity
creditstrategy.co.uk 37 CCTA CONFERENCE 2016 STRONGER TOGETHER GOING FORWARD
2016 has brought unprecedented change to the Collaboration is key. At CCTA we intend to draw United Kingdom. In effect, the vote to exit Europe, a line under the chapter, and lead from the front and consequential ‘musical chair parliament’, threw the quest for a robust, fair and dynamic market. all regulatory cards in the air, and has provided a truly With the FCA authorisation gateway closed we unique opportunity to infl uence how, and where have already targeted a strong public affairs they land. When the dust has settled and equilibrium programme. Following BREXIT, that programme returns, as it must, if we have embraced the inevitable will be further enhanced to protect our members change, and risen to the challenges that will bring, and our industry. We will be working to ensure we will stand stronger together, going forward. politicians and the regulator recognises business Our industry has endured an extremely diffi cult three models of all shapes and sizes, serving specialist years of broken communication and turmoil. Our needs. Our heart, and conference, lies in protecting collective voice of experience and caution appears the consumer whilst safeguarding fi rms, jobs and to have been unheard in the corridors of power, but the future viability of an arena striving to provide now is our chance to re-write the story. modern and innovative consumer credit products.
NON-MEMBER
MEMBER
PRICES NOTTINGHAM 2 November day one conference £210 £260 2 November buffet dinner & drinks reception £90 £112 BELFRY HOTEL 3 November day two conference £210 £260 2 & 3 NOVEMBER 3 November gala dinner & champagne £145 £180 to book online visit www.ccta.co.uk pay by credit card, BACS or cheque. ACCOMMODATION standard double room, per night £120 £120 need help? email: [email protected] PACKAGES call: +44 (0) 1274 714959 day one package - 10% saving £378 £443 SPONSOR 2 Nov conference, buffet dinner & accommodation day two package 10% saving £428 £504 AND EXHIBITOR 3 Nov conference, gala dinner & accommodation OPPORTUNITIES full event package 15% saving £761 £894 full details of all available opportunities 2/3 Nov conferences, dinners & accommodation can be found at www.ccta.co.uk NOTE: all prices excluding VAT for further information, please email:[email protected] or call our offi ce on: + 44 (0)1274 714 959 Streams: Fintech It’s Berlin vs London for the fintech champion title After the starting gun was fired for Brexit, can London retain its locus as Europe’s fintech capital? Ahead of Credit Strategy’s F5 Conference, MARCEL LE GOUAIS asks if passporting issues may decide the winner in a battle with Berlin
Marcel Le Gouais Editor, Credit Strategy
he moment Prime Minister Conduct Authority (FCA) to provide mobile Theresa May triggers Article 50 payment services for online games and gift early next year, will it also sound Headline sponsor cards, Youpass has real concerns about its the death knell for London as future. The group has locations in France, TEurope’s fintech capital? UK and Ireland, and at the FCA’s annual Some German-based companies such as meeting this year, it pressed the regulator’s payments platform Traxpay have said as chief executive about the UK’s ability to much, claiming earlier this year that CONFERENCE cultivate conditions for growth for fintech London had “committed suicide as a companies, post Brexit. leading fintech centre.” Tatiana Rozoum, a director at Youpass, A deliberately baiting view, yes, but not said: “Passporting across all EEA members an isolated one. for a company like Youpass is a fantastic Stefan Franzke, chief executive of Berlin F5 AWARDS: CHAMPIONING opportunity to expand on the legal security Partner for Business and Technology which ALTERNATIVE LENDERS base. It’s possible today because the FCA promotes investment in the city, told Credit is one of the most innovation-friendly On the same day as our F5 Conference Strategy: “Fintech firms looking for an (December 13), which features Experian regulators in the EU.” alternative location after Brexit have Berlin as headline sponsor, Credit Strategy Rozoum explained however that the at the top of their list, as the city provides will be hosting the F5 Awards – another passporting authorisation, which forms her ample opportunity to reimagine banking. new event for 2016. company’s power and nature, is “essential “Since the referendum, we have been The deadline for entries has now passed, to carry on cross-border services while but there’s still time to book your place to contacted by about 25 companies from see who’s redesigning retail lending. benefiting from the law harmonisation, made Britain, most of them start-ups from the Visit f5awards.co.uk for more details on possible with access to the single market.” financial sector. We have already supported categories, or call Vyvy on Post Brexit, London might also be affected three of them to relocate to Berlin.” 020 7940 4821 for table bookings. by the trend of Europe’s country-specific For sponsorship call Ben It’s a stark, admittedly self-serving point, on 020 7940 4803. financial regulators competing. Rozoum though it’s not necessarily exaggerated. added that the French regulators AMF So far the apocalyptic forecasts haven’t and ACPR have announced measures to come true for the UK economy, but depended on passporting to EU member help new financial companies obtain nevertheless the referendum vote is states for access to new markets. For fintech authorisation, by providing a simplified impacting fintech. firms that had been relying on passporting, process, and English-speaking specialists There was a consensus shortly after the and were looking for fresh investment in to assist applicants. CS referendum vote that a stasis in investment spring/summer, the ‘No’ vote dealt a double Stefan Franzke will speak in a panel session decisions would be incurred, along with a blow. One of those firms was Youpass. A on the impact of Brexit on fintech at Credit problem for companies that had hitherto fintech firm authorised by the Financial Strategy’s F5 Conference in December.
Headline sponsor: Gold sponsor:
creditstrategy.co.uk 39 Streams: Insolvency
The livelihoods of 12,000 people saved by TRI Award entrants With 12,000 jobs saved by the business recovery firms that entered this year’s TRI Awards, AMBER-AINSLEY PRITCHARD examines where pre-packs fit into the rescue culture
Amber-Ainsley Pritchard Content writer, Credit Strategy
ore than 12,000 jobs have we have had 38 cases referred of which five TRI AWARDS 2016 been saved by the business received a negative response.
recovery firms that entered “We await full statistics from the this year’s Turnaround, regulatory bodies but we believe that about MRestructuring and Insolvency (TRI) Awards, one third of connected party pre-packs are sponsored by Capa. being referred.” Credit Strategy collated information from Hopewell said the value of the transactions all this year’s entries which provided figures TURNAROUND, RESTRUCTURING & INSOLVENCY is high with the largest having been on how many jobs were saved during a The TRI Awards took place on October £65m and the “average deal” size in excess business rescue process. 19 at the London Hilton Park Lane. The of £500,000. It was discovered that a staggeringly high full winners list will be announced in the Steve Allinson is co-chairman of December issue of Credit Strategy and on number of people’s livelihoods were saved in our website: triawards.co.uk the TRI Award judging panel and a a range of businesses, from those with a consultant at the law firm Shoosmiths. He turnover of up to £20m, up to those with a said: “One insolvency practitioner told me revenue of £21m or more. but there are minor limitations in the that referring to the pre-pack pool had Formerly the Insolvency & Rescue (I&R) evidence provided; or the case for a pre-pack made the acceptance of the administration Awards, the renamed, refreshed TRI Awards has not been made. by the creditors a lot easier. This is a good scheme is now in its ninth year. While the panel member can offer an testament but a voluntary scheme will One of the methods used by several of this opinion on whether there are reasonable always be fraught with uncertainty. It’s year’s entrants, that saved thousands of jobs, grounds for a pre-pack to take place, this important to remember that there is is a pre-pack administration. person cannot prohibit it from happening. provision in the SME Act 2015 for the A controversial tool since its inception, Along with the pre-pack pool, the 2014 government to create compulsory the government issued a report with report’s changes ensured that insolvency legislation around pre-packs by 2020. recommendations on how to reform this practitioners are now subject to more strict “If this pool isn’t successful on a voluntary process in 2014. codes of practice issued by the government, basis it’s possible that a formal compulsory As a result of that report, the pre-pack under the amended statement of insolvency regime will be invoked for pre-packs, or they pool came into practice in November 2015. practice (SIP) 16. The Insolvency Service could be outlawed completely.” This is a panel of independent experts who said SIP 16 will mean creditors have better Aside from pre-packs, David Chubb, review applications for pre-pack access to information about the new owners partner at PwC and a judge for the TRI insolvencies. Applications are made to the of a troubled business, providing them Awards, said that funding solutions are an pool through a secure, online portal. with greater clarity about administrations. increasingly important aspect of the A reviewer from the panel then issues one Co-director of the Pre-Pack Pool, Stuart restructuring toolkit, adding: “Restructuring of three opinions: The pre-pack is not Hopewell, said: “Whilst we got off to a slow practices can continue to save jobs as long unreasonable; the case is not unreasonable start the pace of referrals is now increasing, as there are jobs to save.” CS
TRI Awards sponsors: Headline sponsor
CAPA
40 CREDITSTRATEGY Events calendar
COLLECTIONS, DEBT SALE & COLLECTIONS & CUSTOMER Dates for PURCHASE CONFERENCE 2016 SERVICE AWARDS 2016 your diary 24 Nov 2016 24 Nov 2016 The Midland Hotel, Manchester The Midland Hotel, Manchester Put these critical cdspconference.co.uk ccsawards.co.uk industry events, organised by Credit Strategy, in your outlook calendar.
F5: THE FUTURE OF FINANCE F5: THE FUTURE OF FINANCE CREDIT SUMMIT 2017 CONFERENCE AWARDS
13 Dec 2016 13 Dec 2016 30 Mar 2017 Hilton London Bankside Hilton London Bankside QEII Centre, London f5conference.com f5awards.com creditsummit.co.uk
Headline sponsor
CONFERENCE AWARDS
CREDIT AWARDS 2017 CAR FINANCE CONFERENCE 2017 CAR FINANCE AWARDS 2017
11 May 2017 June 2017 June 2017 The Grosvenor House Hotel, London carfinanceconference.co.uk carfinanceawards.co.uk creditawards.co.uk
CONFERENCE CAR FINANCE
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creditstrategy.co.uk 41 Diary
The Fifth Estate
An insider’s solution to fund free advice Rows over funding for the free debt advice sector have been prevalent of late. Privately, some question if ‘fairshare’ contributions live up to the name. Here, one industry insider explains why
cannot help but notice that an management plans) are not being charged increasing number of organisations any interest. offering free advice are becoming It’s easy to complain about interest rates rather vocal about their funding (or and fees, but having a two or three-year loan Ilack of it). turned into a 10-year interest free loan is, to This involves them requesting donations say the least, rather generous. Those who do or putting pressure on each and every pay on time are not granted this luxury. creditor to pay ‘fairshare’. YEARS In summary, why should people who are But is ‘fairshare’ really that fair? both financially stable and capable be The first thing to consider is whether entitled to free advice and a decade or so of each and every person seeking advice is using debt management plans to distribute really unable to pay something towards the their money for free? cost. So, are all those in debt really destitute You don’t expect to get a plumber or or near destitute? “It’s easy to complain gardener’s services for free. Apparently not, as those in the advice about interest rates and There is of course a simple solution to the sector have enough confidence to put free advice sector’s funding issues; obtain a customers into very lengthy repayment plans fees, but having a two or fair payment paid by the person in debt of frequently five to 10 years in duration, or three-year loan turned based upon their income/assets. more, rather than a debt relief order (DRO), A final thought: A number of well-known bankruptcy or downsizing. into a 10-year interest free debt charities do not simply offer advice and Let us also remember that ‘fairshare’ is not loan is, to say the least, distribute funds for those in debt. a levy on creditors for the provision of the They take it upon themselves to employ initial advice. It is an ongoing monthly levy rather generous” individuals to conduct industry research – often for a decade or more – to collect and with the aim of pressuring regulators and distribute money. creditors? The answer is of course, no. the government. And that research is Is each and every person in debt really Another thing rarely mentioned is that the arguably flawed and/or biased. unable to set up a few direct debits to repay vast majority of these people (on debt Is that a fair use of ‘fairshare’ funds? CS
That sinking feeling when someone hasn’t checked properly
The mind boggles as to the level of due And so it was that an attempt to flog a new phone numbers from claimed it had people’s diligence undertaken, or perhaps wasn’t in credit card by means of a scatter gun consent to send texts.” this case, by Ocean Finance when obtaining approach became an expensive lesson in In an age where data protection and names and phone numbers of individuals - to being shamed publically. concerns over data sharing are soaring in the spam with seven million texts. Ocean Finance, the trading name of collective consciousness, Ocean Finance’s The Manchester-based lender was fined Intelligent Lending (a slightly unmerited conduct begs a question. When ministers £130,000 by the Information name in this instance), believed it was deploy this topic to hoist their own agenda in Commissioner’s Office (ICO) for not getting complying with the law. front of the public eye, did it not occur to the sufficient consent from the individuals This was because, as the ICO described it, right people that this third party should be concerned to send out the texts “the third party firm it obtained names and scrutinised within an inch of its own life? CS
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