Help is at hand for lenders dealing with payment holidays

Posted on:
06-24-2020

Covid-19 has had a rapid effect on everyone’s lives and businesses. It's no wonder companies have struggled to keep up with the instant change in working conditions and workloads.

One issue for lenders is payment holidays, with 1.86 million mortgage holidays issued as of the 28 May, which is 1 in 6 mortgages!

Since the FCA published its guidance in late May, following the extension, it is clear that this problem is not going away anytime soon.

It is also not so straight forward. Although the payment holiday must be granted (unless the lender can prove it is not in the best interests of the customer), it should offer the best solution to the customer. This may not just be capitalising the payment (which should be done with caution), but can include switching to interest only, extending the term or accepting a reduced payment.

This kind of exercise can take time and when 1 in 6 customers are asking for a payment holiday, it can send your call centre into overdrive.

One way of helping with this is automation. We have found that lenders who already had successful automation programmes scaled, were quickly able to adapt to the changes in demand and automate the process quickly.

You cannot of course automate every singe payment holiday, as you need to consider vulnerable customers and people who need or prefer to speak to someone. However, you can use “Cobots”, which can help the agent with the call and carry out some of the heavy lifting and can also automate the process on the back end.

By automating, you are not only enabling the business to be able to handle the amount of calls coming through, it can done quickly ensuring it doesn’t create a backlog, because the staff weren’t able to amend the direct debit in time. In turn reducing the stress for customers, who may be in a more vulnerable situation and may not have been able to get through, reducing the stress all round.

The additional bonus of automating some, or all of the process, is that leaves a full audit trail which cannot be edited. It can prove that the correct information was given to the customer, should the regulator, or customer (at a later date) want to see this.

Ensuring that the process has been automated correctly, is of course key, but this can be done, and it makes all parties lives easier. It can also be switched on and off quickly as required.

Unfortunately, Covid-19 has had a huge impact on everyone, but it is an ideal opportunity to rethink our ways of doing business and how we can do it better. Digital technologies are key for businesses moving forward, not only do they improve the customer and employee experience, they significantly reduce costs within the business quickly and enable businesses to do more with less.

 
A version of this post was originally featured on LinkedIn and can be found here.
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