2024 is already in full swing, and nothing we see leads us to believe that things are going to improve this year. Yet at the same time, neither do we see anything that might cause an acceleration of the status quo.
Read on as we look at our expectations of the coming year for our industry.
A change of government
We almost certainly look set to face a general election this year. If one isn’t called, then Parliament will automatically dissolve in December. If that happens, we’d be looking at around 10 weeks to issue the writs, get nominations in place and run the campaign, which would mean at the latest a March 2025 polling day. It’s more likely that all parties will be locked and loaded, with the PM on the hunt for the most opportune moment to call it.
Whatever happens, there’s little doubt that household finances, the tax burden, the housing market and benefits will be under the manifesto microscope. It would make sense if the Spring Budget came before the election, with some measures delivered immediately and a few more held back until the new parliament, to encourage ‘brand loyalty’.
Updates to regulation
The FCA’s Consumer Duty will enter its first full year and, while we haven’t seen much activity in the debt resolution space, we think it unlikely to get through to 2025 without the lens focusing on our industry.
The big milestone will be the introduction of the Duty for closed products on 31 July (watch this space for a more detailed blog from us in the coming weeks about this).
Council tax amendments
We anticipate that the government will publish its response to the Council Tax Collection Inquiry in Q1 or Q2. This is unlikely to result in immediate changes, but could set in motion the wheels of change, of which one could be closer alignment with FCA principles.
The Committee recommended that “the Government should amend existing regulations to enshrine in law the principle that collection should be based on a resident’s ability to pay.”
This will invoke the age-old argument that robust action actually helps prevent people from falling deeper into problem debt because council tax bills can’t be ‘turned off’, so carrying in-year debt into a new liability year will increase the overall amount owing.
Invariably this ends up back at the decision to abolish Council Tax Benefit in 2013, but alas, that takes us too far off course for this article, so let’s get back to it!
Leveraging the power of data science and insights
Firms will need to deliver (or partner with others who can deliver) industry-leading data science and analytics-led solutions.
In an evolving market, this competitive edge can help to increase cash collections and achieve fair customer outcomes by identifying the next best action for every account at every step of the journey.
More investment in technology
Given where we are with the economy, there is likely to be some nervousness around growing headcount to deal with rising demand.
The easiest answer is to improve efficiency and effectiveness, and this doesn’t have to mean a big investment. A lot of firms will offer services on pay per use or upside only commercial terms – in other words, they only make money if you do.
Making more use of Artificial Intelligence
AI in 2024 promises to be an exciting ride. Expect significant advances in generative capabilities enabling the creation of ever-more realistic and original content. At the same time, AI models will likely exhibit improved reasoning and comprehension, allowing for deeper understanding and application in diverse fields.
It will be fascinating to see how the collections industry starts to mature in the AI space, but be prepared for societal considerations too, as inclusivity, ethical AI, and regulations take centre stage.
We think that the rising tide of new debt will continue into 2024, driven by similar economics to 2023, but against a backdrop of greater political uncertainty. Firms will need to adapt to this, while keeping one eye on the regulatory and legislative changes by making better use of data and technology.
If you want to know more about this, please feel free to get in touch.
About the author
Steve Coppard
Group Director Debt Policy & Strategy
Arum and Just
Steve has been in the debt industry since 2001. He spent most of his career working in government, where he started on the phones collecting VAT debt and ended up being responsible for prompting improvements to the management of over £40bn of public sector debt. He joined Just and Arum in May 2022 where he continues to shape the biggest conversations in the debt market, having been recognised as an Influencer on the Credit 500 list for a number of years. Credit Management Magazine recently called him one of the industry’s genuine thought leaders.