A managed single view of debt
Our thanks to Duncan Baxter of Destin Solutions for taking part in this interview.
What is a managed single view of debt?
It is a consolidated view of debt whereby the creditor, be that a local authority, utility company or the enforcement agency, can see a rounded view of what the individual owes the entire organisation.
Is it possible for the creditor to see even more of the debts owed outside their organisation?
Depending on the debt stream, it is possible to get further information on areas such as any outstanding CCJs (county court judgments) and their values, credit card debt, outstanding bank loans or mortgages.
This data would be supplied by credit reference agencies such as Experian or TransUnion. However, this data will only apply to debt that is classed as a tax. If it is not considered a tax, such as parking fines, housing benefit overpayments or non-domestic rates, you cannot run a credit score report to get this information about the debtor.
For such debts, the only way to have visibility of all would be if the debtor were to share this information, which is unlikely. They would probably only discuss this with a person from the debt advice sector who was helping them.
What are the benefits to the creditor?
A managed single view of debt supports a more sensitive and ethical approach to collection. During a financial crisis such as we are experiencing now, it is definitely better to have a more rounded view.
It allows the creditor to prioritise cases for enforcement and use the insight provided to prepare for an enforcement visit.
They might be looking for a payment arrangement and it will be useful to understand whether the debtor is likely to have any assets.
How can it benefit the enforcement agency?
It also gives the enforcement agents more insight so that they can prioritise visits based on the assets believed to be available.
If the local authority consents to share data with the enforcement agent, they will then be able to see all the local authority data, which is more than they would normally be supplied.
Destin can also show an enforcement agent all the debt for the individual with different local authorities, as they have access to that data. Where there is access to the enforcement agent’s data, you can also profile the debts where they have been instructed.
Are there any benefits to the debtor?
During a visit, if the enforcement agent were aware of their situation in advance, they then deal with the debtor in a more sensitive way. However, it is unlikely this would convince a debtor to share such data.
How can a creditor create this single view of debt?
What we need to do is consolidate all the information from different systems. Local authority systems historically don’t talk to each other. There are usually inconsistent formats and no connection between them.
Destin runs matching routines to join up the data, merging data centres to demonstrate the full view. Our solution sits over the top of the local authority core systems.
We can also bring in another external data feeds in data from credit reference agencies to supplement the data currently held. But, for the reasons given above, it still would not find the “hidden” debt.
What is holding creditors back?
Local authorities are probably not aware that there is the technology there to achieve this. The different teams within the organisation are primarily just looking at their own debts.
The priority for doing this will depend on how much of the payment recovered stays with the local authority. This would be the financial incentive, to add to the more sensitive and ethical approach to collection.
Is a managed single view of debt the way forward?
This approach is the future. At the moment for local authorities it’s a nice to have, but they have increasing pressures to collect their local debt and not just within one area, but also across the different teams in the local authority.
With breathing space and statutory debt repayment plans, creditors are likely to need to start doing this more going forward.