Friday, 21 October 2011

Mortgage Arrears – the Supervisory Strategy of the Central Bank of Ireland

Matthew Elderfield, Head of Regulation, Central Bank of Ireland – October 14th, 2011

I attended this UCC FSIC (Financial Services Innovation Centre) and ACOI (Association of Compliance Officers in Ireland) sponsored event last week and found the subject matter of Matthew Elderfield's speech entirely relevant not just to the domestic mortgage sector, but pertinent to all utility providers servicing the Irish market in the current climate.

In his introduction, Mr. Elderfield stated “…I would like to focus on the very difficult issue of mortgage arrears which is a top priority for the Central Bank.  I welcome the opportunity today to outline in turn the different elements of our supervisory strategy in this area.  I will also tell you about the new work the Central Bank is undertaking in this area which will involve setting out our expectations on the structures and processes regulated lenders should put in place to handle their arrears……………..”

“The significant increase in arrears over time is clear  – the number of primary dwelling mortgage loans in arrears of more than 90 days past due, increased from 3.3% in September 2009 to 7.2% in June 2011.”

Such is the challenge of past-due payments, some utilities i.e. electricity, gas and telco providers have already recognised they need to proactively engage with their customer base struggling to pay their bills.
This engagement is not a simple task; it requires an expertise in debt arrears management - expertise in both systems and people.  At SouthWestern, because of our knowledge and experience in such a space, we are working with leading companies in the energy, telecoms and mortgage book sectors, helping them to do just that – recognize the early signals of payment difficulties, engage with their customers fairly and transparently, to offer options, e.g. payment plans or in the case of utilities, pay-as-you-go meters.

Only last week, Bord Gáis reported that “1 in ten customers are in arrears of €100 or more on their bills.  However, the number of customers in arrears of 60 days or more is down from 115,000 in May to 103,163 at the end of September. 

Bord Gáis said it has been proactive in managing the issue of bad debt. The rate of disconnections has fallen 33%, from 3,540 between January and August 2010 to 2,393 between January and September 2011.
The company said disconnection is an "absolute last resort" for customers who do not engage with them to agree a repayment plan or a pay as you go meter.

Bord Gáis has agreed 63,000 payment plans with customers already this year compared with 31,500 for the whole of 2010.
It has installed 13,161 pay as you go meters this year against just under 1,000 in the same period last year.”

By deploying an agreed system of debt management, SouthWestern clients are making significant inroads in their overdue accounts numbers while at the same time maintaining the relationship with their customers for the longer term. 

Our ongoing work with existing clients in the utilities and mortgage book space reflects the good supervisory systems that Mr. Elderfield is looking to achieve in the domestic banking sector.

Wednesday, 12 October 2011

British Army to outsource recruitment

I thought this article might give us some insight into one of the routes some of the British government departments are actively taking in order to stay within their much reduced budgets.  Food for thought ......

Recruiting sergeants get marching orders as enlisting goes civvy street

MoD to outsource the signing up of soldiers – by Gill Plimmer | Financial Times | October 10 2011

When the British army said “Your country needs you” the call was traditionally barded by recruiting sergeants.  But from next year, it will come from quieter men in suits most likely employed by Capita or Serco.

 The two private outsourcing companies have been shortlisted to handle recruitment for the Ministry of Defence.  They are competing for the contract to sign up 9,000 soldiers a year in a deal expected to cover everything from marketing to some areas of training.

 The outsourcing comes as the MoD faces an 8 per cent cut in its £35bn annual budget.  More than 10,000 soldiers are expected to lose their jobs in a government cost-cutting programme that will reduce the army from 101,000 staff now to 90,000 by 2015, with a further reduction to 82,000 by 2020.

The MoD said that more than 9,000 new soldiers will still be needed each year, in part because the army is expanding its part-time force.

 The recruitment contract – to be awarded next month – will be the first of a series of outsourcing deals that will transform the way the British armed services go about their daily business over the next 10 years.

 Other contracts out to tender include a competition to run the MoD’s back-office and finance functions, while there are also plans to outsource the running of all the regional bases, with private groups responsible for everything from barrack construction to catering.

 The MoD said the recruitment contract was aimed at saving £250m over the next 10 years.  It also hopes that the introduction of private providers will improve the quality of recruits and encourage the better deployment of staff, as expensively trained combat soldiers are freed from desk-bound jobs.

 The government spends £17.5bn a year on support functions for the MoD, but just under half of the work has been given to private providers, which argue they can create further savings.  Serco already provides several services, from logistical support at RAF Lyneham and other bases to the UK atomic weapons establishment.

 It also provides career advice to the US army as well as cost analysis support to the multi-national coalition forces in Iraq.

 Capita has contracts with the Royal Navy, the Army and the Royal Air Force as well as running a back-office recruitment service for the MoD overall.

Thursday, 6 October 2011

Jim quoted in today's Irish Times article

"The term 'call centre' is sometimes perceived in a negative light.  In SouthWestern, we prefer to describe this service as 'contact' centre because the emphasis for us is the contact, the engagement, we make on behalf of our clients with their customers and it's something I feel strongly about.  Have a look at an article in todays Irish Times by Siobhan O'Connell who asked me to contribute to the piece."

Talk not cheap as call centres prove crucial to retailers

Retailers can advertise all they want but shoppers still phone around for best deals. Although the recent closure of the Talk Talk call centre in Waterford grabbed the headlines, contact centres are big business in Ireland. The sector employs 29,000 people across more than 100 contact centre operations nationwide, and many of these centres are vital to the marketing of goods and services.

Retailers can do all the advertising they want but when it comes to big-ticket consumer items, shoppers tend to call around to source more information and find the best deal. And if they don’t get the answers they are looking for at the other end of the phone, then they will likely take their money elsewhere.

This reality was brought home to me personally recently when I had occasion to seek out a new washing machine-tumble dryer for my apartment. My quest was centred on three retailers – Currys, DID Electrical and Power City – and with each of them I was directed to a contact centre.

Calling the phone number for one of DID’s Dublin southside shops puts you through to an Irish contact centre when the shop phone is busy. A helpful agent called Keith did his best to source the Bosch model I was looking for. Alas, after a few calls back and forth, Keith conceded defeat because the model I wanted was not in stock. Keith was to be commended for having even rung Bosch overseas to establish how long it would take to bring the machine to Ireland. However, waiting a month without a washing machine was just too big an ask.

Next on my list was Currys. Finding a phone number on the Currys website was something of a challenge but eventually I tracked down the premium rate 1890 number for the Carrickmines shop in Dublin. The call was answered by a lady in an English call centre and I explained that I wanted to converse directly with someone in the shop, which is located 10 minutes from where I live. That would not be possible, I was informed. Nor would she be able to assist me by revealing the Carrickmines phone number so I could try my luck myself. Instead the only way forward was for the UK call centre to ring Carrickmines on my behalf while I stayed on hold.

But then Carrickmines didn’t answer the phone. Could she please ring the Currys store in Swords or Liffey Valley, I pleaded. No, I was told, because the rules are she can only ring one shop at a time. So I would have to hang up and ring in again.

Rather than persevere with Currys, I rang Power City. As with Currys it is no longer possible to ring a Power City store directly. Instead there is just one phone number listed on the website and it’s a call-back service. This means you ring the number, leave your contact details and Power City will call you back. Which Fergal did within seconds.

As with DID, the Power City call centre is based in Ireland and as with DID the service was excellent. The Bosch model I wanted was in stock, the deal was concluded and an invoice was e-mailed to me immediately. Fergal even gave me his mobile number so I could call him if there were any problems with the delivery of my new machine.

It is estimated that there are 90 million calls like mine made to Irish call centres every year. One of the big operators in the shared services sector is SouthWestern, which handles business for Eircom, O2 and Bord Gáis. Chief executive Jim Costello’s view is that Irish consumers prefer to deal with someone in a call centre based in Ireland.

Creating trust in the person who calls with their query is hugely important, as is understanding the cultural nuances such as being able to discuss the match on Sunday,” says Costello. “But there is a service management cost issue, particularly for white goods retailers, and some companies want to run it as cheaply as possible. If you treat your customers well, they will stay with you longer and they will improve your business over time.

“If the query is resolved by the overseas call centre operative, and service meets expectations, then all is well. But if it’s not, then all of the other factors such as language, accent and culture come into play.”

6 Oct 2011 - The Irish Times - SIOBHÁN O’CONNELL

Read this article in today's Irish Times