Mortgage Arrears Thematic Review

Lessons Learned

What should we learn from this?

• Methodology of a Thematic Review provides excellent framework for self diagnostic

• May provide insight into preparation for the FCA Authorisation process

• Unsecured Arrears Thematic Review scheduled for Q1 2016

• The key findings are equally applicable to Unsecured

• Continual improvement programme is key to managing conduct risk profile

Methodology of previous Thematic Reviews

InformationRequest

Case StudyReviews

On SiteVisit

Follow Up& Actions

• Structure Charts• Policies• Segmentation• Forbearance Options• Strategies• Operational Procedures• Outsourcing & SLAs• MI• Key Documentation• Audit & Compliance

• Randomised Selection• Lifecycle Reviews• Outcome Testing• Individual Remediation• Route Cause

• Interviews• Observation• Discussion of Cases• Queries from Info Req

• Personalised findings• Action Plans• Industry Findings

Mortgage Arrears Thematic – The good news….

https://www.fca.org.uk/static/documents/thematic-reviews/tr14-03.pdf

Mortgage Arrears Thematic – And… The “not so good”….

https://www.fca.org.uk/static/documents/thematic-reviews/tr14-03.pdf

“Culture”

“Pro-active”

“Flexibility”“Vulnerability”

“Skills & Knowledge”

“Governance Arrangements”

“Inflexible Process & Systems”

What could go wrong?

Quality Assurance

MI focussed on £

Incentive schemes

Commercial structures

Supplier oversight

Governance

Management awareness

Recruitment

Skills & Training

Redress & Remediation

Operational SLAs & Tgts

Vulnerability

Do you have a clear definition of “detriment” and how to define a “good outcome”?

Complaints Management Policies (& Exceptions)

Diagnostic Tools – you all have what you need!

• FCA publications• Your front line staff• Your Compliance & Internal

Audit functions

• Top down – “Systems engineering”• Bottom up – “e2e risk assessment”• Potential detriment mapping

(measures / controls)

Culture is a bigger word than it looks

• It’s easy to start at the bottom…

• Fixing the burning issues…

• Setting up your QA frameworks…

• But if the culture from the top isn’t right...

What is a “culture” anyway?• A pattern of shared beliefs, practices, attitudes and conventions

• Integrated behaviours dependent upon capacity for learning and transmitting knowledge to succeeding generations

• Customary beliefs of a social group, and characteristic features of everyday existence shared by people

• But if the culture from the top isn’t right…..

Define it

Teach it

Live it

Measure it

Reward it

How to build it

The Role of Quality Assurance… And Controls…

What does good look like?Call opening

Fact finding

Assessing circumstances

Solutions planning

Agreeing next steps

Call closing

Continuous Improvement

Self assessment

Line 2 / Line 3

FCA / LSB

Case Reviews

Complaints & QAAc

tion

Plan

Governance

Owners

KPIs

Controls

Performance Contracts

Communication

Testing

Good conduct management may be a programme or a senior management role in its own right

Stating the obvious – the 5 C’s of Collections

Customer Affordability

Conduct

Customer

Cost

Commercials

Where next? Lots of you are already going there…

Self service budget plannersInteractive SMS / Live Chat / Web Chat

Payment PortalsTransfer of Information

Where next? But there’s room to take it further…

• Good tools & good data• Better view of affordability• Shorter phone calls• Easier for customer• Reduced costs• More appropriate solutions• Better outcomes

Stating the obvious – the 5 C’s of Collections

Conduct

Customer

Cost

CommercialsCustomer

Affordability