Collections and Servicing in the Post-Pandemic World: A Glimpse into the New Normal

Editor's Note: This article, authored by Joann Needleman and Ann Lemmo, originally appeared as an Alert on ClarkHill.com, and is republished here with permission.

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The collections and servicing industry and call centers are being hit hard as a result of COVID-19. Agencies and businesses are scrambling to supply their staff with the hardware and software to work remotely while shifting the number of workers to comply with the Centers for Disease Control and Prevention (CDC) and the Occupational Safety and Health Administration (OSHA) guidance to ensure seamless operations. Industry associations and strategic groups are engaging one another to share suggestions, insights, and tips during this most unusual time. The blocking and tackling will continue for the next several weeks and possibly months.

The industry will get through this. However, this crisis has exposed weaknesses and impracticalities that exist in a 21st century world. After the crisis is in our rear-view mirror, there will be significant soul-searching to rethink the industry’s infrastructure which will impact consumer engagement in the future as well as inevitable operational changes.  

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Moving Towards the Use of Remote Agents

This will be a difficult decision not only from the perspective of client acceptance and consent, but from state licensing requirements. As the result of COVID-19, many state governments, including state regulatory agencies, have issued temporary guidelines regarding work-from-home (WFH) for employees of licensed entities, including collection agencies. But should industry make it a priority and demand that this guidance be permanent?

Flu outbreaks, epidemics, and even pandemics are nothing new. In 2009 the H1N1 (Swine Flu) virus infected 100 million Americans killing about 75,000. The CDC reports that between October 1, 2019, and December 7, 2019, there were up to 3.7 million cases of the flu, between 23,000 to 41,000 hospitalizations, and approximately 1,300 to 3,300 flu-related deaths. As of March 18, 2020, there have been 120 deaths due to COVID-19 of the 7,708 cases reported. The data and history suggest that future infectious diseases will continue to have a significant impact on our workforce.

Building the infrastructure to support remote access could be significant and result in some instances of a complete implosion of current operational policies. However, in the past week, businesses and collection agencies have already been forced to invest in hardware and software updates and enhance IT security in order to accommodate the closure of their brick and mortar operations. Why not leverage what has already been spent?

Moving towards Better and More Effective Technology when Contacting Consumers

The trend of using alternative methods of communication, like email and text,  fell upon the industry in the past year and was further validated by the Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Rule for Debt Collection. However, before last week, many in the industry were still skeptical and hesitant to incorporate these methods in their day-to-day collection activity. The mandates of social distancing and self-isolation suggest that now, more than ever, consumers are going to be less willing to be contacted by a call either at home or on their cell phone about their financial situation. Consumers are going to have questions and be in dire need of assistance and will want to have those conversations on their terms in the methods they prefer. In the coming months, a company’s website must be a vital resource for a consumer rather than an innocuous banner which says little about who you are and what you do. Think about ways a consumer can learn about their debt or ways to settle or negotiate.  If you have not considered a chat function, why not think about it now? After the moratoriums and bans on collection of debt are lifted, companies will need to be creative --not to mention highly sensitive -- to the needs of the consumer. Further, maintaining a high level of integrity will ensure that our industry is not associated with the fraudsters and scammers who will be praying on consumers in vulnerable situations.

New Policies and Protocols

After Hurricane Katrina, companies scrambled to developed disaster recovery policies. Prior to last week, did your company have an Infectious Disease Preparedness and Response Plan? Can you identify within your company those who are high risk of infection and do you have the controls in place to assess those risks? The answer is probably no, but this health crisis has resulted in a whole new set of questions that your clients want answered and information that you will want from your existing or future vendors. New absentee and sick policies will need to be implemented in order to discourage workers from coming to work when sick. Cleanliness, respiratory etiquette and sanitizing through hand washing will also have to be addressed. Finally, assessment of co-worker interactions including the sharing of phones, offices and other tools may have to be curtailed. 

The cliché statement that “every problem brings an opportunity” has never been truer. The other day a wise colleague also said that “how we act now will define us in the future.” The impact from COVID-19 will not discriminate; both sides of the equation will be equally impacted.  There is no more business as usual, rather business for the future.

Clark Hill's Financial Services Regulatory and Compliance Practice Group is currently assisting clients with technical guidance, policy advice and strategy to address the implications of COVID-19 upon the financial services industry. Please contact Joann Needleman for further information.

Clark Hill has put together a resources page devoted exclusively to clients and colleagues through this difficult and rapidly changing times. https://www.clarkhill.com/pages/covid-19