A Debt Collector's Reputation, Deserved or Not?

When it comes to tarnished reputations, in the eyes of the general public, I think that it would be difficult to beat that of the Debt Collection Industry. You could argue, in recent years the Banking Industry has put up a fight for this mantle and the Insurance and Pensions Industry are always there or there about.

What makes all these industries similar is finance and the making of money from money.

If we take the debt industry, in a perfect world, there would be no debt, everyone would pay their bills on time and money would flow through the supply chain in a smooth and timely manner. If only this was the case. In reality, bills are not paid, cash flow is restricted and debt is passed down the supply chain instead of monies.

So I could argue that the debt collections industry helps cash flow and keeps the wheels of industry turning by freeing up money, but I think that this would fall on deaf ears.

The problem lies not with the popular and I think ageing image of debt collectors as bruising thugs who bash down the doors of the poor and the needy. The problem itself is much more subtle then that.

The service of collecting debt should benefit both the client, the individual or company to whom the debt is owed and the customer, who needs to pay the debt. Although this is on the whole true, the reality is that the client only avails themselves of the service under duress and begrudges all costs associated with collection of the debt; that they feel should have been paid without need for the service in the first place. The customer on the other hand, does not want to be contacted, to be reminded of their financial failings and have the stigma of debt placed upon them.

The modern face of UK debt collection is one of professionalism, of FCA regulation and of maintaining good relationships between clients and their customers.

Clients are helped to recover costs by adding clauses into their terms and conditions, which then encourages using 'third party physiology' to contact the customer earlier to resolve the debt. Third party debt collection should no longer be seen as a last resort.

A third party also helps by taking the emotion out of the debt and hopefully keeps the relationship between clients and their customers.

Debt collectors are now well trained to talk to customers in a caring and understanding way, so as not to alienate and to reminded them of their financial failings. The aim is to resolve the problem and to find the best way for the debt to be paid.

As a final argument in the defence of this industry, I would like to talk a little of a particular type of need that third party debt collection benefits both the client and the general public involved.

I would like to talk about property service charges.

If you are a Residents Management Company, a Managing Agent or even a Landlord, then statistically, property service charge arrears are the main causes of disputes between freeholders and leaseholders.

The third party benefit to the client is that most modern leases allow for recoverable costs for third party debt collection and therefore allows for the time consuming task of recovering these debts to be pass on.

The benefit to the general public, the paying leaseholders is that non paying service charge leaseholders are contacted earlier, cash flow is protected and future service charge demands are not effected by recovering not revenues.

So this means that third party collection benefits everyone involved.

I hope that this blog has gone some way to improve the reputation of the modern debt collection industry. Although this too might fall on deaf ears.

By Kevin Bishop - Senior Partner at Town and Country Legal Services LLP