Vulnerability: a guide for debt collection 21 questions, 21 steps March 2017 Contents Foreword 1 Executive summary 2 How to use this guide 4 What this guide is based on 5 Introduction 6 Defining vulnerability 8 Rationale for action 10 Extent of vulnerability 12 For every organisation: 21 questions, 21 steps 15 Staff practice 1 How well do your staff share what is happening about vulnerability? 16 2 How well do your staff identify vulnerability? 18 3 How well do your staff start conversations about vulnerability? 22 4 How well do your staff handle customer disclosures? 24 5 How well do your staff handle carer disclosures? 27 6 How well do your staff understand vulnerable situations? 30 7 How well do your staff gather further evidence? 34 8 How well do your staff support customers in vulnerable situations? 38 9 How well do your staff work with partner organisations? 40 10 How well do your staff end conversations involving vulnerability? 42 11 How well do your staff record data about vulnerability? 45 Focused support 12 How well do you support customers with mental health problems? 48 13 How well do you support suicidal customers? 54 14 How well do you support customers with serious or terminal illnesses? 62 15 How well do you support bereaved customers and third-parties? 67 16 How well do you support customers with addictions? 71 17 How well do you support your staff? 77 Organisational development 18 How well do you train your staff on vulnerability? 80 19 How well do you quality assure your staff on vulnerability? 83 20 How well do you work with debt advice agencies on vulnerability? 86 21 How well do you put your principles into practice? 88 Conclusion 90 References 92 Acknowledgements 94 This guide was written by Chris Fitch1,2, Jamie Evans1, and Colin Trend3. 1Personal Finance Research Centre, University of Bristol; 2Money Advice Trust; 3Plymouth Focus Advice Centre This research study was funded by the Finance & Leasing Association and The UK Cards Association. Foreword This guide provides new data, new insights, and We are now able to share these results – covering mental health, new recommendations for organisations working serious and terminal illness, suicide, bereavement, addictions and a range of other vulnerable situations. with indebted customers in vulnerable situations. These findings validate much of the work that the sector has been The guide is the first published report based on new research undertaking on vulnerability, and in particular the progress that has funded by the Finance & Leasing Association and The UK Cards been made in relation to customers with mental health problems. Association. It has allowed us to collect new data from nearly At the same time, the findings also identify new challenges which will 1,600 staff working in a representative sample of creditors with be of interest to all organisations, and which will need to be met. in-house collections teams, UK debt collection agencies and debt purchase agencies. Insight for action However, most importantly, this guide does not only provide an Endorsed by the key membership associations, the guide provides account of the challenges that staff may be encountering, but also new insights and practical guidance for those working within practical guidance on how these can be addressed and overcome. collections, including new recommendations on working with customers living with mental health problems, serious physical For these reasons, we thank all the staff and firms that took part or terminal illness, bereavement and addictions. It also looks at in the study, and welcome the publication of this guide, and the customers who disclose thoughts of suicide. introduction of new guidance into our shared debate about, and continual improvement to address, vulnerability. Looking back In 2010, the first-ever study was conducted of the experiences, practices and challenges faced by staff working in debt collection Stephen Sklaroff Director General, Finance & Leasing Association organisations when engaging with indebted customers with Graham Peacop Chief Executive, The UK Cards Association mental health problems. Joanna Elson Chief Executive, Money Advice Trust Prompted at the time by a commitment within the industry to Paul Smee Director General, Council of Mortgage Lenders explore how these customers could best be supported, the study John Ricketts President, Credit Services Association forged an important collaboration between the creditor, money advice, and research sectors. Robin Fieth Chief Executive, Building Societies Association Anthony Browne Chief Executive, British Bankers’ Association This study led to the publication of the influential ‘ten steps’A and ‘twelve steps’B briefings, which provided simple and effective actions for organisations to take, based on evidence and insight from staff working in frontline and specialist collections roles. In particular, the’12 steps’ publication has proved popular, with its key steps being included in the Financial Conduct Authority’s 2015 ‘practitioners’ toolkit’ on vulnerabilityC. The current landscape In the two years following the launch of the Financial Conduct Authority’s work on vulnerability, much has positively changed in terms of policy, practice, and progress across the collections, creditor and advice sectors. Vulnerability is now part of the landscape, specialist teams have been formed in many organisations, and new guidance and principles continue to be published. However, we cannot measure the impact or progress of our collective work, without the having the necessary data to make such evaluations. New data, new insights Consequently, over the last year, organisations have contributed to this research by the University of Bristol to both significantly expand our understanding of the range of vulnerable situations, and also to take the opportunity to look back at changes since the 2010 study of mental health. A Fitch, C., and Davey, R. (2010). Debt collection and mental health: ten steps to improve recovery. Royal College of Psychiatrists and Money Advice Trust, London. B Fitch, C., Chaplin, R., and Trend, C. (2015). Lending, debt collection and mental health: 12 steps for treating potentially vulnerable customers fairly. Royal College of Psychiatrists and Money Advice Trust, London. C Financial Conduct Authority (2015). Consumer Vulnerability. Practitioners’ Toolkit. Appendix to Occasional Paper No. 8. FCA, London. 21 questions, 21 steps 1 Executive summary: what are the key messages? industry • the response of the industry to the study was positive – and interest in participating was extremely strong interest • this resulted in 1573 frontline and specialist debt collection staff in the UK undertaking our online survey (1226 frontline staff and 347 specialist staff) • these staff worked in a representative sample of 27 organisations who undertook telephone debt collection, covering creditors with in-house collections teams, debt collection agencies, and debt purchase agencies • positive attitudes and practices were found among staff towards customers mental with mental health problems Step 12 Pages 48-53 health • of the 27 surveyed organisations, six firms participated in both our 2016 and 2010 surveys – an analysis of data from these firms indicates marked and positive improvements in disclosure management, attitudes, and practices • however, organisations need to ensure that indebted customers with mental health problems also report these positive changes – data from wider sources suggests this may not always be consistently happening • organisations need to take more action to respond to customer disclosures of Step 13 suicide suicide Pages 54-61 • in the last year, 1 in 4 frontline staff spoke to at least one customer they seriously believed might kill themselves • disclosure numbers to individual staff members may appear small – however, they add-up: in a multi-site organisation, this is equivalent to a disclosure of a serious suicide risk every three days addiction • more frontline and specialist staff reported difficulties in talking about addiction Step 16 – be it to gambling, alcohol, or drugs – than any other type of vulnerable situation Pages 71-76 • this requires action – organisations need to consider how addiction is currently considered (in their policies, protocols, and training), and staff should be able tospot the signs and raise the issue with customers terminal • when encountered, terminal illness is an issue that staff can find difficult Step 14 illness • between 24-33% of frontline and specialist staff report that they haven’t received Pages 62-63 sufficient training in this area • a need exists to both ensure staff are able to support customers in such a situation, and that staff are also supported by their organisation if emotionally affected by a conversation with a terminally ill customer • identifying customers in vulnerable situations is one of the most difficult identify challenges that staff report Step 2 Pages 18-21 • again, between 24-33% of frontline and specialist staff report that it isn’t possible to identify someone with either a mental health or physical health problem respectively, with the consequence that this has to be disclosed by the customer • while understandable, this indicates a need to give staff more support to help identify customers in vulnerable situations, otherwise opportunities for help and support will be lost • supporting customers in vulnerable situations requires more than ‘breathing space’ Step 8 support – instead, staff require