The main message from this survey is that ‘Collections UK’ is very ‘underinvested’ in several ways, and therefore underperforming, to the detriment of NPA figures, profitability, customer experience and shareholder value.

Collections for credit cards is being done better than for loans (the product is simpler and so any weaknesses are therefore less manifest and damaging), but despite this some 50-60% of cards units have been underinvested and are underperforming. The financial performance data show a clear link to sustained innovation and investment programmes. So with further change in areas now well understood, costs could come down and 13-week cure rates could go up by 12-15% for half the respondents. Surprisingly they are not currently working on gaining these further real reductions in cost of collections and in bad debt cost. It seems that Directors and Management Boards are not aware that such gains are available.

Collections for loans is very weak in both effectiveness and efficiency terms – exceptional performances are rare. Increasing sophistication and recent investment, where they have been made, have seldom delivered the expected cost efficiency increases. Most units are falling well short of expected performance, despite the fact that some 50% have carried out a second round of automation and performance enhencement.