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Make The Responsible Call

Few would argue use of the telephone is an integral part of efficient and effective debt collection in the 21st century. Misuse of this contact method continues to exist however, and has inevitably contributed to the increased focus being placed on adherence to existing legislation, and the introduction of new guidelines and other relevant literature in this area.

In response, however, some may say this ever-increasing focus is placing an unfair burden on the role of telephone collecting, and risks the creation of a collector community dangerously underconfident in their ability to pick up the phone, speak to the debtor and reduce the outstanding debt.

OFCOM

While the collector and those who manage and train the collector hold a huge responsibility for adherence to the law and fair practice, the degree of the responsibility will inevitably vary depending on the nature of the requirements. In the case of telecoms regulator OFCOM's recently re-published statement on the misuses of telecommunication networks, particular focus is given to nuisance telephone calls - often generated by predictive diallers - which cause an individual to be dialled persistently where there is no caller at the dialler's end.

Clearly, the collector's ability to adhere to this requirement is negligible, but it is all too easy for the responsibility to be lost altogether in an organisation which holds with the historic view unintentional nuisance telephone calls are just "par for the course" when utilising an automated dialling system.

OFCOM appears understandably determined to counter this view, reserving the right to impose a £5,000 fine if an accusation of such calls is upheld.

Guidelines

Somewhat contrary to its title, the Office of Fair Trading's (OFT) Guidance Note on Debt Collection issued in July 2003 is not just a set of suggested guidelines but constitutes a set of rules which, if broken, can ultimately result in the loss of an organisation's consumer credit licence and thus prohibit trading.

Not surprisingly, a significant portion of the guidance is directly relevant to telephone collecting but, in addition to its stand-alone significance, the note is also helpful to the industry in its interpretation of section 40 of the Administration of Justice Act 1970,which deals with the criminal offence of debtor harassment.

Common sense

While the guidance note lists many examples of 'unfair business practices', common sense is also key in ensuring a sensible interpretation of reasonable collections behaviour, and the OFT believes this is the best way to avoid prescriptive generalisations which would fail to take account of individual debtor and creditor circumstances.

By way of example, the guidance cites the 'contacting of debtors at unreasonable times and at unreasonable intervals' as unfair business practice, but falls short of providing exact times when contact should be avoided. A commonly held view, however, is a collector should not call before 8am and after 9pm Monday to Saturday, or on Sundays or bank holidays - unless specifically requested to do so by the debtor.

There are of course organisations which interpret 'reasonable
contact times' less cautiously than others. And there will always be cases where, for example, a telephone call on a Sunday may indeed be justified - particularly in higher arrears cases where previous sustained collections effort has proved fruitless.

However, a procedure which allows the telephoning of, say, an early arrears customer at 9am on a Sunday, where no previous efforts to telephone have been attempted, may be more difficult to justify.

Transparent

Collectors must be transparent as to who they are, who they work for and the purpose of their contact. They must not misrepresent their authority or legal position, and phrases which exploit a debtor's lack of knowledge must not be used.

"Pressurising debtors to pay in full, in unreasonably large instalments, or to increase payments when they are unable to do so" is also listed under unfair business practices and, once again, a balance of reasonability needs to be reached here between the rights of the creditor and those of the debtor. In general, 'pressurising' is a word which is readily understood but, in the context of debt collection, needs careful thought to differentiate between assertive behavioural tactics and aggressive, non-flexible words and actions.

Data Protection

In addition to the above, the guidance reiterates the existing obligations under the Data Protection Act 1998 which prohibits the disclosure of debt details to third parties unless legally entitled to do so. In recognising what not to do when making collection calls, the fact remains the effective use of the telephone provides a powerful tool in the management of outstanding debt.

To use a teacher analogy, within five minutes of a new teacher entering the classroom, his or her level of authority and discipline is established purely through image, manner and tone. The telephone, of course, facilitates use of this hugely powerful image creator within the debt collection environment. Even if the call results in nothing other than a refusal of the debtor to speak, the exercise has not been entirely fruitless. The telephone has put the collector where the debtor is, however uncomfortable it may or may not be for the debtor.

In using the telephone, the likelihood of voice to voice contact has increased, and with it the likelihood of a positive, money-based result.

In summary, legislation and other similar requirements mean an organisation's collection strategies and tactics for telephone collection have to be well thought out - more so than in the past - and the spontaneous "let's try this" attitude is fraught with risk.

However, training and managing collectors to use the telephone with educated confidence will undoubtedly motivate and empower the operator to improve the contact rate with those in debt, and guarantee more money is collected more quickly within the law.

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