Inside RateSetter: collections and recoveries

Last week we announced that the completion of two sales of non-performing loans had added £4.65 million cash to Provision Fund – you can read the full detail here. A number of investors have asked to hear more about RateSetter’s approach to non-performing loans, so in the first of a series of blog posts looking at aspects of the RateSetter business, we’ve interviewed our Director of Customer Operations, Steve Collender, about collections and recoveries. 

Steve oversees RateSetter’s customer services and operations for investors and borrowers. We talked to him about what RateSetter does to secure the best possible outcomes for consumer loans that don’t perform as well as expected, via our Collections and Recoveries team.

What does the Collections and Recoveries team do?

Our team of 35 people is based in RateSetter’s Leicester office. We are a diverse group with many decades of experience across customer services and collections. The team’s focus is to step in if a personal loan customer misses a payment to get the loan back on track, to support borrowers that are going to have difficulty repaying their remaining balances and, where loans go into default, to recover as much money as possible.

The team has incredibly low employee turnover – under 3% in the last year – which we are very proud of, and this means we retain knowledge, best practice and experience. When we bring in new team members, onboarding is taken incredibly seriously with a detailed training plan covering all areas before any customer contact takes place. Training is ongoing for every member of the team with a focus on best practice for vulnerable customers, on which we conduct training refreshes on a 90-day cycle.

The team deals with inbound queries via phone, email and letter and manages outbound contact with customers via phone. We manage relationships with third parties such as debt management companies with the aim of supporting our customers through financially difficult times.

How do you work with borrowers?

Much of our communication with personal loan customers is via automated notifications. For example, following a missed or failed payment, we notify the borrower that they can get easily back on track via our 24/7 online payment systems – we aim to make it as simple and convenient as possible for borrowers to make payments. For accounts where following our notifications there has been no payment or response for 24 hours we contact the borrower directly via phone to put in place a repayment plan. Where we have exhausted our options for recoveries, we may outsource to specialist collections businesses and if no success is achieved we may proceed to a debt sale.

How do you ensure that borrowers are always treated fairly?

This is always top of mind - we have an ongoing focus on treating customers fairly at all points of the collections and recoveries process and we keep our approach under constant review to ensure it is as effective and fair as possible. We are also aware of the wider context in which we operate and at the current time we are being sensitive to the evolving impact of the coronavirus on our customers. As already mentioned, we have a focus on vulnerable customers, and we are pleased to have recently been shortlisted for a Credit Award specifically for our vulnerable customer strategy.

How do you measure collections and recoveries performance?

We manage consumer loan collections through a variety of Key Performance Indicators to ensure our strategy and activity are always as effective as possible. We closely monitor data on missed payment rates and trends, the proportion of loans that we get back on track, how our notifications are performing and the channels through which we are receiving payments from borrowers (e.g. weblinks in our notifications, card payments made via our team, and payments via our website). On a daily basis we review which loans have gone into default, with these loans being charged-off to the Provision Fund. We work closely with RateSetter’s Credit Risk team to monitor collection performance in great detail and report into our regular Credit Committee meetings.

Where does the money that is recovered go?

If a loan goes into default, the Provision Fund steps in to return the outstanding capital to the investor. Our team then recovers as much of the money due to the Provision Fund as possible. All monies collected by our in-house team, third party specialist collections businesses, via Individual Voluntary Agreement to repay debt, or via debt sales goes straight into the Provision Fund. Typically each month the recoveries team return £500k+ to the Provision Fund.

Have you seen any changes during the coronavirus outbreak and how have you responded?

We have seen a significant increase in customers contacting us since the outbreak started. We have dealt with borrower enquiries as quickly as possible keeping call waiting times in single figure minutes, which compares well to many other financial firms where waiting times have been measured in hours. We already had the right tools available to assist our customers during these difficult times and we are using them where appropriate based on a discussion of each borrower’s specific financial circumstances. We continue to review our process, procedures and strategy for customers in financial difficulties in line with guidance from our regulator the Financial Conduct Authority.

What do you find most rewarding about your work at RateSetter?

The positive engagement with other RateSetter departments and Board gives us the ability to adapt to changing circumstances quickly, however the most rewarding part of my work has been the development of the team as a whole. Like everyone, we have been affected by the coronavirus as individuals, and even with three-quarters of the team working remotely, they are still taking calls while remaining highly professional and committed to delivering for RateSetter’s customers, their colleagues and our business.

What would people find surprising about RateSetter’s Collections and Recoveries?

We have the capability to call every personal loan customer in arrears in a day.

 

Look out for more Inside RateSetter blog posts for further insights into the workings of RateSetter’s peer-to-peer platform.

 

The Provision Fund we offer does not give you a right to a payment so you may not receive a pay-out even if you suffer loss. The Fund has absolute discretion as to the amount that may be paid, including making no payment at all. Therefore, investors should not rely on possible pay-outs from the Provision Fund when considering whether or how much to invest.  Learn more