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HOW FINANCIAL SERVICES COMPANIES CAN STRIKE A BALANCE BETWEEN EFFECTIVELY RECOVERING DEBT AND TREATING CUSTOMERS FAIRLY

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HOW FINANCIAL SERVICES COMPANIES CAN STRIKE A BALANCE BETWEEN EFFECTIVELY RECOVERING DEBT AND TREATING CUSTOMERS FAIRLY

By Lloyd Birkhead, managing director at Grosvenor Services, part of specialist outsourcer Echo Managed Services

Following the global economic crash of 2008, the financial services industry has been faced with increased scrutiny – particularly when it comes to its debt collection practices. It’s a widely-held view that the industry’s approach to recovering monies owed can often be unethical,particularly when compared to other industry sectors known to take a more customer-centric approach.

In fact, just last month HSBC was ordered to pay £4m back to customers who were subjected to unreasonable customer fees charged during debt collection by the Financial Conduct Authority (FCA).

With household debt hitting pre-recession levels, and many struggling to keep up with payments, it’s important that companies within the financial industry review how they conduct debt recovery – engaging in a reasonable and fair manner – or they could not only face the wrath of the FCA, as above, but also damage valuable customer relationships.

So where are companies going wrong?

In the UK,63% of adults have experienced some form of debt recovery – whether that’s as a result of defaulting on mortgage repayments, or missing payments on a bank loan or a credit card. Given then that many of us will at some point in our lifetime be left in arrears, sometimes unintentionally, it becomes clear that effective debt recovery techniques are imperative – but not everyone is getting it right.

Research tells us that a major shortfall of companies, when it comes to debt and debt recovery, is alarmingly,inaccurate billing. Billing issues could be getting a customer’s details mixed up with another’s, double-charging, or failing to update balances in real-time when a repayment has been made. When a billing error occurs, it can plunge poorer customers into debt involuntarily or lead to ‘protest debt’ – that is the refusal to pay – amongst more affluent customers. Either way, the customer faces a poor experience whilst the company loses out. Acknowledging these issues when they happen, learning from them and ensuring processes are changed accordingly is important to avoid repeating the same mistakes.

When bad practices are employed, expect customer frustrations to heighten – instances when customers have to repeat themselves constantly, to a company to whom they’re paying, is one such example.Our ‘Counting the cost of debt recovery’ report also found overly-zealous approaches to debt collection in terms of the number and tone of communications to be a major bugbear of customers – leading to feelings of harassment and embarrassment. This shatters customer trust and loyalty and makes future contact more difficult.

The cost of bad debt recovery practice

Poor practice is damaging to a company both financially and in terms of its reputation.

When a customer is exposed to poor recovery practice, it can hinder the actual retrieval of the monies owed – research shows us that almost a fifth of consumers would deliberately delay a payment in order to punish a company for the delivery of poor service. Further to this, over half of consumers would switch their service provider altogether if they were subjected to poor debt recovery techniques.

Additionally, over two-fifths of customers who face poor practice recount the experience to others – using the word of mouth effect to further damage the company’s reputation.

It’s important to recognise debt as part of the customer journey – it may just be a temporary setback. It’s crucial to strike a balance between the long-term value of a customer against a more short-term payment gain. Failing to strike such a balance may cause a customer to switch to a competitor– the last thing anyone needs in the current economic climate.

Ways to improve

While we’re clear about the detrimental effects bad debt recovery practices can have, it’s never too late to review the practices currently in place and make improvements – which should, in theory, increase the likelihood of debts being recovered fully and improve customer relations.

Be proactive when it comes to affordability and vulnerability issues

Of course not all debt is due to poor practice and mistakes made by businesses –  much of it is due to customer circumstances. With household debt on the rise again, it’s becoming increasingly important for those operating within the financial services sector to be proactive in identifying and addressing affordability and vulnerability issues. Making concerted efforts to take into account the vulnerabilities of those who are in debt, and giving them access to free impartial advice and affordable, sustainable repayment plans, is imperative to help guide them out of debt.

A flexible approach to communication

When it comes to debt recovery, offering flexibility and choice in communication channels is vital to drive engagement. Research shows us while the majority of consumers say they react best to a phone call or a letter, almost a quarter (24%) of consumers prefer email or SMS contact.

As well as offering a range of communication channels, it’s important to tailor contact to the customer’s profile – i.e. if the customer works full-time during office hours, it’s probably not a good idea to give them a call then. Instead, sending a text or an email might be the best approach. It’s all about having a deep understanding of each customer and their circumstances and deploying due skill, care and diligence to tailor approaches accordingly.

Knowledgeable and empathetic agents

Debt can be a sensitive issue which is why front-line agents who have direct contact with customers need to be knowledgeable, empathetic and have a customer service mindset – able to offer practical advice whilst also listening and taking into account each customer’s unique situation and needs.

Getting doorstep visits right

Visiting the door of a customer is often considered a last resort, however research has found that doorstep visits can be effective in identifying those customers who are vulnerable or struggling with affordability issues, as well as helping reconnect a company with customers they’ve previously struggled to engage with. Furthermore, doorstep visits can increase the likelihood of repayment – with half of consumers either making an immediate payment or agreeing to an affordable payment plan in such instances. Doorstep visits bolster customer engagement while building and strengthening customer trust.

As borrowing levels continue to increase, and with household debt on the rise once again, it’s important for financial services firms to review their practices now to ensure they’re using the most effective practices to retrieve monies owed, whilst keeping customer interests at the forefront of what they do. As research shows, treating customers fairly will boost satisfaction, strengthen loyalty and create added value to the customer journey. Failure to do so can lead to punishment from regulators, plunge customers further into arrears and cost a company in the long-term, not only financially but in terms of its reputation too.

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Death of the workplace friendship: study shows how remote working is eroding our meaningful connections with colleagues

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Death of the workplace friendship: study shows how remote working is eroding our meaningful connections with colleagues 1
  • Employee experience platform Perkbox’s research on 1,296 employees and 300 business leaders reveal 65% think the ‘new way of working’ will take its toll on workplace friendships
  • 45% of employees say that maintaining emotional wellbeing still remains one of the biggest remote working challenges; yet only 20% of bosses agree

  • Meanwhile 35% of business leaders confess they are struggling to cope with the pressures of keeping employees happy at the risk of their own personal wellbeing

Friendships at work have long been a debated topic pre-COVID: arguments either side profess these to be both conducive or a hindrance to productivity and creativity. Yet, according to new research into the national state of employee wellbeing conducted by employee experience platform Perkbox, 45% of 1,296 respondents say that maintaining emotional wellbeing still remains one of the biggest remote working challenges facing businesses, with 65% believing that workplace friendships – now even more critical in the ‘new working world’ – are suffering because of remote working.

Colleague camaraderie in the age of COVID

The benchmarking study saw that 54% of employees now believe that maintaining ‘social wellbeing’ (how connected we feel with our colleagues and the wider world) presents one of the biggest wellbeing challenges in light of remote working – an increase of 18% from Perkbox’s study of the same sample set the previous month.

Yet there is a clear disconnect between what employees feel and what their employers believe: only 12% of business leaders recognise their employees’ social wellbeing as a significant challenge in the age of remote working, and only 20% of bosses (compared with 45% of employees) believe that maintaining ‘emotional wellbeing’ (how we feel about stress, anxiety and our overall mental health) is a significant challenge that mustbe addressed.

Some employers, however, confess that they are struggling with the pressures of keeping their employees happy, safe and productive during this ‘new normal’, with 35% saying that this has been at the cost of looking after their own personal wellbeing.

Mona Akiki, VP of People, Perkbox, commented: “Many organisations pre-COVID either didn’t pay much attention to friendships at work or focused on it as a way to ensure that it didn’t create any conflicts within the organisation. Today, we’re realising that strong colleague interactions seem to matter to an employee’s social and emotional wellbeing.

Remote working appears to have created nervousness around our sense of connectivity and camaraderie with our colleagues. Forward thinking organisations are quickly realising that this should matter to them as well.

Although organisations didn’t necessarily cause the current climate, the increased sense of anxiety and burnout amongst their employees who are now living and working in silo at home will not only impact the individual’s health but also the wellbeing of the team and the business. Both employees and employers must work together to combat this challenge and achieve wellbeing before it becomes an even bigger issue.”

Sedentary and sad

The third instalment of Perkbox’s benchmarking study also showed, for the first time, how physical health due to less movement has risen to be one of the top three wellbeing challenges for employees (after social and emotional wellbeing). With the removal of the daily commute and longer hours spent at the computer in order to appear more productive and thus more indispensable, 37% of employees believe that their physical wellbeing has suffered – with lack of exercise fuelling the emotional crutch of unhealthy comforts such as takeaways, binge watching and excessive drinking. The government’s recent guidance to “work from home, if you can” could exacerbate the problem further.

Tackling the problem 

Before and during the earlier months of COVID-19, workspace wellbeing (how the safety of our work environment and / or ability to work well from home is affecting us) was the most implemented initiative by 79% of businesses, with initiatives around social wellbeing coming a close second (75%). Yet – perhaps because of the economic uncertainty brought about by COVID compounded by the lack of acknowledgement by bosses that emotional and social wellbeing is a problem felt by employees – 16% of small business say they have no plans to implement initiatives to tackle these challenges; a figure which has doubled from the previous Perkbox study.

Furthermore, 30% of smaller business have no plans to implement financial wellbeing support during this critical period (compared to 9% in the last study); 23% have no plans to implement physical wellbeing initiatives (an increase from 9% previously), and 13% have no plans to implement emotional wellbeing initiatives to support employees’ mental health (compared to 5% previously).

“There is a concerning trend – especially among smaller businesses – about disinvesting in overall employee wellbeing initiatives at a time where support is needed the most,” commented Mona Akiki, Perkbox.

“There seems to be a lack of understanding that these initiatives need not be expensive but considered, human-centric and empathetic to the emotional, social, physical and financial challenges that beset us every day, hindering us from our ability to perform optimally. A team whose wellbeing has been adequately attended to has the resilience, energy and creativity to weather business challenges more effectively than a team whose members are emotionally, physically and socially run ragged. Our research acts as a barometer for how pressing these concerns are to both employees and employers. These challenges, at least for the medium term, are here to stay. It’s time that businesses invest in employee wellbeing as part of a wider essential strategy to ‘keep the lights on’ where others are floundering.”

As part of Perkbox’s New Working World series, a number of surveys and reports are being produced to track employee sentiment towards wellbeing as we exit a post-Covid world. This is being run alongside a survey of UK employers to see the business perspective on wellbeing impact in light of 2020’s events. For more information and full report on the studies findings, visit: https://www.perkbox.com/uk/resources/library/new-working-world

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Half of UK’s finance sector confirms diversity should be more of a priority in the workplace, with calls for action across the industry

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Half of UK’s finance sector confirms diversity should be more of a priority in the workplace, with calls for action across the industry 2

Almost half (45%) of Britain’s banking/financial services workforce think their employer could do more when it comes to diversity, according to a report from UK-based tech-for-good developer, Culture Shift.

Despite 74% of employees in the sector confirming that working somewhere with a diverse workforce is an important factor for their happiness at work, almost half (46%) think diversity seems like less of a priority in the workplace currently, with 52% stating it should be more of a priority. The same report also uncovered that 53% of employees in banking and financial services said their employer makes token gestures that feel surface level when it comes to diversity and inclusion.

Diversity and inclusion have long been key factors for ensuring a positive and happy work environment, however the events of recent months, such as the resurgence of the Black Lives Matter movement, have resulted in these climbing up the agenda of many employers.

“The insights on diversity and inclusion uncovered in Culture Shift’s report really do resonate with me, as they shine a light on the lack of true representation across the UK’s positions of power. Employees are calling for their employers to focus on recruiting people from more diverse backgrounds, while providing training to the workforce on diversity and inclusion, confirming action really does need to be taken.

“If organisations want to create a happy work environment then they should take heed, as most employees confirmed working somewhere with a diverse workforce was an important factor to their happiness at work,” comments Olive Strachan MBE, founder of Olive Strachan Resources Ltd, global business woman and diversity and inclusion specialist.

The research found that fostering a diverse workforce representative of reality is a key factor for creating a positive culture and a key component for most employees’ happiness at work. With many calling for more to be done when it comes to ensuring that not only do under-represented groups have a presence in businesses, but also a seat at the table and a voice, there are various factors organisations should be keeping front on mind whilst planning for the future.

On fostering a diverse workforce, representative of reality, the research revealed that:

  • 80% of employees in banking/financial services said working at a company with a strong ethical background was important to them, with 84% stating that working at a company with a good reputation for treating employees fairly was integral to their happiness at work
  • Almost one-fifth (18%) said their employer could improve workplace culture by recruiting more people from BAME backgrounds, while one-quarter (25%) said by providing training to the workforce on diversity and inclusion
  • 15% said their employer could improve its culture and be more inclusive by recruiting more people from LGBTQ+ (Lesbian, Gay, Bisexual, Transgender and Queer) backgrounds
  • More than one-quarter (26%) said their employer could improve its culture by recruiting more people of varying abilities; while 21% said by recruiting a better gender balance
  • One-quarter (25%) said their employer could improve its culture by recruiting more people of different religions/faiths
  • 15% said their employer should prioritise the promotion of people from minority and marginalised backgrounds to improve its workplace culture

“To create an empowering culture for all employees, it’s absolutely essential for organisations to be diverse, inclusive and showcase true representation across all levels of the business. Not only do recruitment processes need to be inclusive, but promotion opportunities too, and employees from marginalised backgrounds need to be supported through their career, as well as other employees.

“We firmly believe this is an incredibly important conversation to have and the insights uncovered in our research solidify that we’re not alone in believing more action needs to be taken by those at the top. It’s a shift that won’t happen overnight, but there needs to be clear intent from employers to keep diversity and inclusion at the top of their agenda,” adds Gemma McCall, CEO, Culture Shift.

Culture Shift exists to lead positive change in organisational culture, through building products that empower them to tackle harassment and bullying.

“We hope the insights uncovered in our report, combined with the fact that diverse workforces are consistently proven to be more successful, result in employers making some tangible changes across the board to ensure their teams are truly representative of reality,” concludes Gemma.

To see more insights uncovered by the research or to download the full ‘Maintaining workplace culture in a rapidly changing environment’ report, visit info.culture-shift.co.uk/maintaining-workplace-culture.

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American Express and Amazon Business Launch Co-branded Credit Cards for Small Businesses in the UK

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American Express and Amazon Business Launch Co-branded Credit Cards for Small Businesses in the UK 3

The co-branded Cards offer flexible benefits and payment optionality by allowing small businesses to decide between earning rewards or adjusting payment terms on eligible purchases

UK small business Card launch builds on American Express and Amazon’s long-term relationship and co-branded Card programme in the US

American Express (NYSE: AXP) today announced the launch of the new Amazon Business American Express® Card and the Amazon Business Prime American Express® Card for small businesses in the UK. The Cards offer a host of rich rewards and payment flexibility designed to help businesses better manage their cash flow and gain greater insight into their spending.

The Cards provide an enhanced check-out experience on Amazon Business UK and Amazon.co.uk that gives Cardmembers the option to earn reward points or select a deferred payment term for each transaction, enabling them to make the best payment choice for their finances. Reward points can be earned anywhere American Express Cards are accepted and redeemed toward future Amazon purchases or applied to the balance of their monthly Card statement. This new Card programme in the UK has been developed as part of the on-going relationship between American Express and Amazon which includes a co-branded programme in the US and a global Card acceptance relationship.

This launch comes at a time when 63% of British small businesses say cash flow issues have led them to delay purchasing goods and services they need to run their business, according to new research from American Express and YouGov1. Nearly a quarter (23%) of the survey participants said they have put off ‘bigger ticket’ purchases over the last six months until they have funds available, and 38% of them are only buying the ‘essentials’ they need to keep their business operating.

Commenting on the new Card launch, Colin O’Flaherty, General Manager of UK Global Commercial Services at American Express, said: “We have been serving small businesses for over 60 years, and are passionate about helping our small business customers effectively run and grow their businesses, especially during this challenging period. With many UK SMEs facing financial hardships, we want to make it easier for businesses to manage their finances and continue accessing the goods and products they need with more options to pay. We know that a vast number of the UK’s businesses rely on Amazon’s wide-ranging products and services and are excited to launch this powerful and flexible new payment tool that will allow small businesses to select how to pay, purchase by purchase.”

Dave Brittain, Director of Amazon Business UK, said “Working with American Express to launch the small business credit Card was a natural decision for Amazon, given our shared long-standing commitment to helping small businesses flourish globally. We’re incredibly proud to launch this Card programme as it offers small business owners and entrepreneurs the best of both companies: the convenience and value they have come to know and love from Amazon, underpinned by the world-class service, benefits, access and security of American Express. These benefits have never been more important at a time when businesses are navigating the challenges and uncertainty which Covid-19 has presented.”

Amazon Business American Express Cardmembers and Amazon Business Prime American Express Cardmembers will have access to the following key benefits:

  • 2% Amazon Rewards points on the first £120,000 in purchases at Amazon.co.uk, Amazon Business UK and Whole Foods Market UK each calendar year, 1% thereafter or 90-day payment terms on such purchases for Cardmembers who are Business Prime members on Amazon Business UK
  • 1.5% Amazon Rewards points on the first £120,000 in purchases at Amazon.co.uk, Amazon Business UK and Whole Foods Market UK each calendar year, 1% thereafter or 60-day payment terms on such purchases for all other Cardmembers
  • 0.5% Amazon Rewards points on all other purchases for all Cardmembers

Both Cards come with a £50 annual fee, however, this is waived for new Business Prime American Express Cardmembers in the first year. Upon approval, new Cardmembers who are Business Prime members will receive an Amazon gift card with £50 value, and all other Cardmembers will receive a £25 Amazon gift card. As an added benefit for Amazon Business Prime American Express Cardmembers, their Cards will feature a unique vertical design that is composed of metal.

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