Lenders have had a roller coaster ride in terms of structure and stability, but they have also changed in the eyes of consumers and the wider market.
Lately, the man or woman in the street is likely to have read more about the intricacies of lending institutions than ever before, although it is unlikely this has led to a better understanding of the market environment.
There has been a shift in consumers’ opinion of lenders, and here the media sound bite has reigned supreme. The factors leading up to the credit crunch were intricate and crossed economic, cultural and geographical divides. I wonder how many people in Kent knew their council had £50m stashed in an Icelandic bank prior to the credit crunch? Not many, I bet.
And so, because of the complexity of the subject, we have reached a situation whereby it’s easy for the uninformed to attribute the current situation to lender greed. This is sad, but true.
One result is that lenders are under the microscope, as can be seen in the furore surrounding the passing on of base rate cuts. Lenders are once again being cast as faceless monoliths rather than commercial businesses. .
It’s likely that 2009 will be a tough year for lenders and borrowers, with no end to the liquidity crisis and unemployment rising to three million.
This will inevitably lead to higher arrears for lenders to cope with at a time when their internal resources are stretched. For this reason, outsourcing has become a buzz word in the sector.
Of course, the quality of outsourcer chosen is critical when considering the Treating Customers Fairly implications of policies and procedures. In the realm of arrears, lenders must ensure they are adhering to the spirit of TCF while taking decisions on repossessions.
That’s why companies should choose outsourcing partners that are experienced in their field and employ trained staff. There are many new companies in the outsourcing market so you’ll probably understand why, given our 30-year pedigree, I would argue there is no substitute for experience. But it goes further than that.
Outsourcing is now a widely used and accepted business resource. Perhaps some professionals still perceive the use of outsourcers as risky, but this can be quickly mitigated by a good provider.
As lenders review their staffing requirements, the reasons for outsourcing are likely to be many and varied, but the pressure to seek out competent outsourcing partners will remain constant.
The best outsourcing specialists organise their processes to suit their clients’ needs rather that their own, and can deliver an equivalent cultural, trading and operational environment.
The bottom line is that lenders are putting their brand and their reputation in the hands of other firms. They must be certain that the partners they chose are competent. Of course, a good record offers reassurance, but it is equally important to ensure your partner is receptive to change.
The cost of outsourcing is bound to play a part in any decision, but service should be the main driver. Like most things in life, you get what you pay for and enhancing the customer experience relies on robust service backed up with rock solid guarantees.
The outsourcing market – especially where it involves the provision of legal advice – seems certain to rocket in the coming months due to a rise in demand for these services and a shortfall of inhouse resources, so this is a time to LSchoose your partners with care.