Lowell: ‘The legacy perception of collections needs to change’

CS: Why are you partnering with Credit Strategy on the Parliamentary Reception?

JP: “The reception is so important in bringing MPs and stakeholders from across the credit cycle together to both highlight and solve important issues for consumers across the UK. Partnering with this event is a great opportunity for Lowell to be at the centre of that process and showcase the extensive work we are doing to make credit work better for everyone in the UK. 

“Over the last three or four years we have been working hard to improve the wider credit system for customers, whether that is highlighting vulnerability, uncovering hidden debt problems, enhancing the sector’s customer practices, improving financial education or raising collection standards.” 

CS: How can talking about vulnerability with MPs and financial services’ business leaders help to cause change? 

JP: “We see customers in vulnerable situations on a daily basis and it is vital that we have the right practices in place to manage and support those individuals to find the right outcomes for them. 

“The right outcomes mean not only preventing harm, but also looking at the long-term impact we have on the customer and rebuilding their financial health. We believe that this approach could be adopted across many other industries, outside of financial services and policy makers like MPs can help drive that change. 

“We can also accelerate learning through the sharing of best practice, given Lowell has a strong capability on supporting customers in vulnerable situations, we want to share that knowledge with MPs and business leaders so we can develop real solutions that target the root causes of vulnerability.

“There is also still somewhat of a legacy perception of our industry that is both unhelpful and outdated. We believe that by highlighting how the industry actually operates today, to policymakers and clients, it can better inform them and help accelerate collaboration on such an important issue.”

CS: How does Lowell’s Vulnerability Index aim to improve the financial lives of individuals in the UK?

JP: “At its core, our Financial Vulnerability Index (FVI) is designed to inform policymakers and others about the state of financial vulnerability and its long-term drivers in the UK. We want to highlight the disparities in vulnerability but also the varied distribution of it across the UK. 

“Hopefully, it will allow decision-makers to see the drivers of vulnerability, such as a lack of savings or high-cost short-term credit usage and then use that insight to inform the right targeted interventions. 

“Since we have launched the index, we have had such great engagement with a variety of organisations, government and individuals using the data and discussing issues within the current credit system that could improve outcomes. 

“It has shown the benefit of insight that our sector can deliver as well as how we should be working with policymakers and others to help. We hope that government organisations, businesses and individuals all find the insight useful.”

CS: How can the credit and financial services sectors better understand the root causes of financial vulnerability and help, rather than just identify?

JP: “The FVI is helping to identify drivers of vulnerability, but we want to take meaningful action forward. For us, that is about using the insight to pinpoint and support solutions.

“We have already been working for three years with the Centre for Social Justice’s (CSJ) Financial Inclusion Unit on a number of areas that we feel can really make a difference, including the raising of collections standards in the public sector and highlighting the issues of hidden debt to policymakers. 

“We’ve also been working with the CSJ to try and pin down, once and for all, how to improve financial education amongst young people in this country and break those debt cycles before they start.

“Beyond that, we are exploring the link between affordable credit and vulnerability in order to come up with meaningful interventions that can improve much needed access to affordable credit in some of the UK’s most financially vulnerable areas.”

CS: What more can regulators do to help businesses who are supporting financially vulnerable consumers?

JP: “We believe that this is about continuing support, given what we have experienced to date. At Lowell we have had a very productive relationship with the Financial Conduct Authority, built around a shared goal of improving consumer outcomes and supporting the financially vulnerable. 

“We already share FVI insights and the development of our award-winning customers in vulnerable situations strategy has benefited from their insight. The next step is collaborating even further on projects where we can really support more individualised customer care and bring about long-term changes for customers, such as making the most of digitisation and improved signposting and provision of debt advice services.”

CS: How do you think people’s attitudes towards credit and financial health has changed during the pandemic?

JP: “Everything from the pandemic to the cost-of-living crisis has sharpened people’s focus on their daily finances. The FVI has shown us that there is already rising vulnerability and that will only be further exaggerated as government support has tailed off and inflation continues to bite, and will for some time. 

“We have also seen that the recovery in use of credit was almost immediate after the second lockdown, so clearly there is still customer appetite. It all inevitably leads to a squeeze on household finances and businesses, both in the credit industry and outside such as energy firms, need to be aware of that and the impact on their customers. 

“For the credit sector, it feels like a pivotal point where we can show how different we are to people’s legacy perceptions. As an industry we must be aware of the coming scrutiny and ensure our customer practices meet and exceed people’s expectations.” 

Find out more about the Parliamentary Reception on March 22 here.