FICO Data: UK Consumers Struggled to Reach Lenders About Payment Problems in Pandemic

New FICO research¹ reveals that 1 in 10 UK borrowers found it hard to get assistance during the first phase of the pandemic; financial service providers need to be better equipped to offer support as extension of payment holidays come into force this week

LONDON, Nov. 5, 2020 /PRNewswire/ --

Highlights

• Motor finance customers faced the greatest challenge making contact with their lender at the start of the pandemic at 33 percent
• Over 1 in 4 (27 percent) credit card customers and nearly a quarter of mortgage customers found it difficult or not easy to make contact with their lender
• 26 percent of customers seeking assistance experienced long waiting times for calls to be answered and 28 percent reported a lack of immediate information
• 60 percent of customers would like lenders to use email for future outbound communications
• Nearly a third of female respondents said they would prefer to be contacted by letter, indicating the kind of tailoring needed for effective communication

New data from global analytics software provider FICO reveals that UK consumers found contact with lenders difficult in the early days of the pandemic. Now, as another country-wide lockdown begins and the number of financially vulnerable customers rises, the FICO research highlights the importance of timely, tailored communications with customers in financial stress.

The data revealed that customers across product lines faced challenges getting in contact with their lenders, including:

• 33 percent of motor finance customers
• 27 percent of credit card customers
• 23 percent of mortgage customers

"As a new lockdown is due to come into force in England this Thursday, the FCA has confirmed an extension to the payment holiday arrangement; government has also extended the furlough scheme for some sectors," said Bruce Curry, FICO vice president for collections and recovery consulting and sales in Europe, the Middle East and Africa. "This is a turning point for lenders — they must be able to respond faster across multiple channels, or risk losing a big piece of their customer base. Indeed borrowers across every segment said that they are likely to move accounts in the next six months, or when renewing the secured credit, because of their experience during COVID-19."

Motor finance customers appeared to be the most likely to move at 53 percent; main current account and credit card provider both at 30 percent and mortgage at 25 percent.

The survey shows that at the start of the pandemic, borrowers were frustrated by long waiting times and an initial lack of information.

"Our research shows that most customers still picked up the phone when attempting to contact credit providers — and this put a huge strain on providers' systems," said Curry. "Incredibly in this age of digital transformation 43 percent of mortgage customers, 49 percent of credit card customers and 55 percent of motor finance customers used the phone as their primary communication channel. It was also interesting to see the demand for 'confirmation of agreement' from those customers that need something more tangible than just an SMS. Economic victims need additional assurance on implied commitments from lenders."

The FICO research found that Gen Z (16-24) were the least satisfied with the communication method used by their financial service provider during the first stages of the pandemic; 45 percent reported dissatisfaction. Millennials (25-39) were next at 40 percent.  The Silent Generation (75 +) were not particularly silent, with 35 percent saying they weren't satisfied.

The FCA has reported² that 12 million people in the UK had low financial resilience in July 2020, meaning they may struggle with bills or loan repayments. According to the FCA data, over a third (36 percent) who already had low financial resilience, and had a mortgage, said they are likely to fall behind on mortgage payments; 36 percent of those with loans or credit cards are worried about repayments on these.

"People will be struggling to pay their bills for some time, and looking to their bank or other financial provider for real, thoughtful help," said Curry. "The second national lockdown will increase the number of credit-stressed consumers, who won't show up in collections right away as they will get support in the near-term. The post-Christmas peak may look flatter, as people use the payment holidays to cover holiday spending. If that does happen, the normal collections spike will come back with a vengeance later in the year, as Christmas borrowing on revolving credit becomes harder to service.

"These compounding stresses make omnichannel communication and self-serve strategies more important than ever. Lenders need to deliver both improved customer engagement and satisfaction, while reducing pressure on stretched contact centres."

For more information on effective customer communications, visit https://www.fico.com/en/latest-thinking/product-sheet/fico-customer-communication-services-collections-0 

About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 195 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time.

Learn more at https://www.fico.com

FICO is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.

¹ Research conducted on behalf of FICO by Censuswide, 28.08.20-03.09.20 – 3,000 UK adults
² https://www.fca.org.uk/news/press-releases/fca-highlights-continued-support-consumers-struggling-payments

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SOURCE Fair Isaac Corporation