The UK’s leading High Street banks are strengthening their Debt Collection teams ahead of the emergency covid loan defaults.
The UK’s four largest banks are said to have hired over 750 new Debt Collection staff to their debt recovery units in a major challenge facing them. It is expected there will be a tidal wave of defaults on the loan repayments as Businesses struggle to cope in the aftermath of the pandemic.
Natwest is reported to have taken on an extra 150 debt collection agents to handle recovering overdue covid loans whilst the HSBC has taken on nearly 200 extra to help tackle the expected problems.
As part of their training, the new banking debt collection teams will be ordered to demonstrate empathy with business owners in difficult financial situations. This is in line with FCA requirements and directives issued.
This softly softly approach is intended to avoid a repeat of the huge damage to reputations caused by the financial crisis in 2008. Some banks were accused of employing heavy handed and aggressive debt collection practices.
“We did bootcamp training to make sure they’re all ready to go” Hannah Bernard, the Head of business banking at Barclays told Reuters news.
The UK government initially estimated that losses on the most popular bounce back loan scheme could be as high as sixty per cent. This loan enabled small businesses to borrow up to £50,000 yet is rumoured to have be manipulated by fraudsters.
If the 60% expected default rate becomes apparent, then the tactics banks employ to call in debt will be brought into the spotlight. It would also signal an impending high level of debt collection activity from some of the UK’s largest financial institutions.
“What we are better at now, and it’s not just banks but I think society, is understanding more about vulnerability, the stresses people have and the connection between one’s business and personal life” said HSBC’s head of commercial banking Amanda Murphy.
The initiative comes as the Public Accounts Committee, the watchdog responsible for overseeing government spending, warned last week that taxpayers could lose tens of billions of pounds through support schemes set up to limit the impact of Covid-19.
Hindsight is a wonderful thing but it was the intention of the government to support as many businesses as possible through the coronavirus pandemic.