Callcredit Blog

Applying Real World Thinking to the FCA’s review on persistent debt

Collections & Recoveries

In April the Financial Conduct Authority released its report on persistent debt in the UK. One of the most shocking findings was that persistent debt is a problem that’s affecting 3.3 million people. That’s about three times the population of Birmingham.

To quote the FCA, persistent debt is when someone’s “minimal repayments are being outweighed by interest and charges”. So it is no surprise that the consumer-focused FCA is suggesting that it’s the credit card companies who should be stepping up to the plate to help people struggling with the problem.

As part of the report the FCA have also laid out a timetable for action. In their opinion when customers have been in persistent debt for 18 months they should be encouraged to make faster payments, but if the situation still hasn’t improved after another 18 months, the credit card companies need to come up with a repayment plan that has a realistic chance of success. This includes the option of writing off interest or other charges – not an ideal scenario for any credit card provider.

While no-one could deny that it’s good to protect vulnerable customers, it’s in the industry’s interest to stop persistent debt from happening in the first place.

This is certainly evident from work completed with Callcredit’s clients says James Connolly, Head of Debt & Utilities; “We see overwhelming evidence that if customers experiencing financial difficulty are identified at an early stage then companies are able to address, limit and even prevent further deterioration to their situation by deploying the appropriate strategies and support. This undoubtedly benefits the business and most importantly the customer.”

The FCA report talks a lot of common sense and we believe in practical solutions that can help make that happen, including:

Keep a close eye on your customers
All sorts of changes in a customer’s behaviour can give early alerts – positive or negative – about what’s happening with their finances. We’ve extensive experience of working hand in hand with lenders to fine-tune the best combination of indicators to give a true picture.

Get a single customer view
It’s vital to have an accurate, consistent and single view of your customers’ activity. That’s because lenders often have separate customer databases that contain data about the same person but with varying personal information. Callcredit can work closely with you to allocate a unique DataDNA number to individual customers. This will help you get a single view and consolidate your customer records. This approach is already helping a number of clients get greater understanding of their customers and is also saving them around 8% on their customer management costs.

Check your data
Old or wrong data is about as much use as week-old news. Always ensuring your data is clean and up-to-date is an essential step to help you reach out effectively to customers while also checking their contact details, debt exposure and over-indebtedness.

Segment and profile
Giving individual attention is vital but taking a broader view is important too. By creating profiles and segmenting customer types you will be able to develop a richer strategic plan and contact strategies that will work.

Above all, be proactive
It’s obvious that the FCA believe credit card companies should be actively seeking to identify customers with persistent debt. This approach has benefits for both sides, so don’t just sit on data, act on it too.

If you need any help in understanding what the FCA’s proposals mean, or how we can work with you to meet them, just email Or for more information on how we’re bringing Real World Thinking to the Collections industry:

We also welcome your comments below.

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