How Consumer Duty changes collections communications

Collections communications play a big role in shaping what happens next for a customer.

A letter, text message, email, call, or self service prompt may be the first sign a customer is falling behind. It may also be the moment they decide whether to make a payment, ask for help, raise a dispute, or ignore the problem altogether.

This is why communication sits at the center of Consumer Duty.

For firms within scope, the FCA’s Consumer Duty requires them to act to deliver good outcomes for retail customers. Two parts of the Duty are especially relevant to collections communications:

• Consumer understanding: customers should be given the information they need, when they need it, in a way they can understand.
• Consumer support: customers should be able to get the help they need without unreasonable barriers.
  

This doesn’t mean every message needs to be rewritten from scratch for every customer. It does mean firms should look carefully at whether their collections communications are clear, accurate, timely, and connected to a practical next step.

This article provides general information only and isn’t legal advice. Consumer Duty applies to firms, products, and services within its scope. Firms should assess their collections communications with appropriate legal, compliance, operational, and customer support stakeholders.

Start with the customer’s next question

Most collections communications are written around what the firm needs to say.

Consumer Duty asks firms to think about what the customer needs to understand and do next.

After receiving a collections message, a customer should be able to answer a few basic questions:

• Who is contacting me?
• Which account or payment does this relate to?
• What's happened?
• What do I need to do next?
• What are my options?
• What happens if I can’t make a payment?
• How do I ask a question, raise a dispute, or get support?
• Where can I find more information?

If the customer has to call to understand the message, the communication probably hasn’t done its job.

Clear communication can reduce confusion, repeat contact, avoidable complaints, and situations where a customer takes no action because they don’t understand what help is available.

Consumer understanding is more than sending information

A collections message can include all the right facts and still be difficult to understand.

Customers may be under financial pressure. They may be reading a message quickly on a mobile phone. They may not understand industry terminology, account language, or the difference between a missed payment, arrears, default, a payment arrangement, or a dispute.

The FCA’s Consumer Duty materials make clear that firms should support consumer understanding, not simply provide information.

For collections teams, this means reviewing whether communications:

• Explain the purpose of the message early
• Identify the account or payment clearly
• Use plain language and avoid unexplained jargon
• Separate the most important action from supporting detail
• Explain available options and next steps
• Make payment, support, and dispute routes easy to find
• Use consistent language across letters, email, SMS, self-service, and agent conversations
• Reflect the customer’s latest account status and any known support need

A long message isn’t always more transparent. Customers need the right information in the right order, with a clear way to act on it.

Make it easy for customers to get support

Consumer support matters most when a customer needs help.

A customer may be able to make a payment through a portal without speaking to anyone. But they may also need to discuss a change in income, ask about a payment arrangement, challenge a balance, explain a vulnerability, or get help understanding their options.

The customer shouldn't have to work through a maze of automated messages, long wait times, or repeated explanations to reach the right support.

Collections teams should review:

• How customers ask questions about their account
• Whether support routes are clear in every communication channel
• How easily a customer can move from self service to human support
• Whether customers can tell the firm about hardship, vulnerability, or a changed circumstance
• Whether communications explain what happens after a customer asks for help
• How authorized representatives, debt advisers, and other third parties are handled where appropriate
• Whether teams can see the customer’s recent interactions before making contact

The FCA has said that firms should design and deliver support that meets retail customers’ needs, including the needs of customers with characteristics of vulnerability.

This doesn't mean every interaction needs to start with a specialist. It means the process needs a clear route to the right person when the customer’s needs go beyond a straightforward payment task.

Use self service to reduce friction, not create it

Self service can be useful in collections.

Some customers want to check a balance, make a payment, update details, review an arrangement, or find basic account information without making a call. A clear digital journey can save time for the customer and reduce unnecessary contact for the collections team.

But self service isn't a complete Consumer Duty strategy.

A portal or payment link can create a barrier if customers can't:

• Understand what they're being asked to do
• Find a way to ask a question
• Get help when the account is more complicated
• Report a change in circumstances
• Access the service because of a disability, language need, digital exclusion, or other barrier
• Move to a human support route when self service isn't appropriate

The best approach gives customers a choice. Keep straightforward tasks straightforward. Make it easy to reach a person when the customer needs more help.

That is especially important in collections, where a customer’s circumstances can change quickly and a digital journey may not show the whole picture.

Keep communications consistent across channels

Customers don’t experience communications as separate systems.

They experience one relationship with the firm.

If a letter says one thing, a text message says another, the self service portal shows a different balance, and an agent can't see a recent payment arrangement, the customer is left to work out which version is right.

This can create confusion and undermine trust.

Collections teams need a clear process for keeping messages, account information, and next actions aligned across:

• Letters and printed notices
• Email
• SMS and other messaging channels
• Customer portals and self service journeys
• Inbound and outbound calls
• Agent scripts and guidance
• Third party agency communications, where relevant

The point isn't to make every message identical. A text shouldn't contain the same amount of information as a letter. But the core account information, available options, and support routes shouldn't conflict.

A reliable system of record can help by connecting communication history, account status, payment arrangements, disputes, preferences, and relevant customer flags to the next action. For more on the records and workflow side of customer contact, see TCPA compliance in debt collection communications.

Calls are part of the same customer journey

Collections calls are often where the most important conversations happen.

A customer may call because they didn't understand a letter. An agent may make contact after an automated reminder. A customer may disclose financial difficulty, raise a dispute, or explain that an existing arrangement is no longer affordable.

The call shouldn't feel disconnected from everything that came before it.

Agents need access to the information that affects the conversation, including:

• Recent communications and customer responses
• Current balance and payment status
• Existing payment arrangements
• Open disputes or complaints
• Communication preferences
• Relevant hardship or vulnerability information
• Previous promises, commitments, or support requests
• Clear escalation routes when the case needs specialist review

Customers shouldn't have to repeat difficult information because the previous interaction was never recorded or never reached the next team.

That doesn't mean agents need to see every piece of personal information. Access should reflect the employee’s role and the information needed to provide appropriate support.

For more on handling sensitive circumstances in collections, see FCA vulnerable customer guidance for collections teams.

Make sure messages reflect changing circumstances

A generic communication may be appropriate at the start of a standard process. It may no longer be appropriate after the customer’s circumstances change.

For example, the next action may need review when a customer:

• Enters a payment arrangement
• Misses an agreed payment
• Raises a dispute or complaint
• Requests more information
• Changes a communication preference
• Discloses financial hardship or vulnerability
• Starts working with a debt adviser or authorized representative
• Makes a payment that changes the account status

A collections operation needs a way to make sure those events affect future communications and workflows.

Otherwise, a customer may receive a standard reminder after they have already asked for help, disputed the balance, or agreed to a different plan. This can feel impersonal and can make it harder for the customer to trust the process.

Technology can help connect account events to workflow changes. It can't decide what appropriate treatment looks like in every situation. Firms still need clear policies, trained teams, and escalation routes for exceptions.

Measure whether customers understand and get support

Open rates and payment clicks can be useful. They don't tell you whether customers understand what they received or got the help they needed.

Collections leaders should look at a wider set of signals, including:

• Repeat contacts about the same question
• Complaints about unclear or inconsistent information
• Call transfers and repeat calls
• Customers abandoning a self service journey
• Requests for clarification after a message is sent
• Escalations after a standard communication
• Quality assurance findings from customer calls
• Use of hardship and support routes
• Communication errors or outdated-template incidents
• Differences in outcomes across channels or customer groups

These measures can help teams identify where a message, workflow, or support route is not working as intended.

The goal isn't to track every possible metric. It's to spot patterns early and make changes before the same issue affects more customers.

Build collections communications around clarity and support

Consumer Duty doesn't require firms to make collections communications longer, more complicated, or more personalized than necessary.

It does require firms to think about whether customers can understand what's happening and get appropriate support when they need it.

For collections teams, this comes down to a few practical principles:

• Explain the account, options, and next step clearly
• Make it easy for customers to ask questions or get support
• Keep communications consistent across channels
• Use self service for straightforward tasks, with a clear route to human help
• Make sure known changes in circumstance affect the next action
• Give agents the context they need to have useful conversations
• Monitor where customers get stuck, repeat themselves, or raise concerns

That is good customer service. It is also a more practical way to support Consumer Duty outcomes in collections.

For a broader explanation of the Duty and its four outcomes, read Consumer Duty in collections and recovery.

Enhance your customer service experience with a configurable debt collections platform

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To find out more about Debt Manager’s capabilities to improve your level of customer service contact a member of our team today.