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Link Financial Outsourcing successfully implements new Breathing Space regulations

1st May 2021

Link Financial Outsourcing successfully implements new Breathing Space regulations

The new Statutory Breathing Space regulation (SBS) came into force on 4th May 2021, and provides a period of time for those in problem debt and with mental health issues to get their finances under control.

Those eligible to be granted an official breathing space will have 60 days in which to sort out their financial situation.  The arrangement is overseen by a debt adviser or charity who can offer support. While the SBS is in place, creditors cannot call or contact the debtor and further interest cannot be added to the loan.

Link already had a solid track record of forbearance and of showing support for customers in financial difficulty, and a highly experienced team skilled in coping with the individual needs of customers and working with them to resolve payment difficulties.

So that we would be ready for the introduction of the SBS and to ensure that we would be able to maintain our normal high standards of customer care and compliance with the new regulations, we started planning, preparation and testing months in advance.

The objective was simple – customers in financial difficulty receive debt advice from relevant professional advisers and can qualify for a period of 60 days (or longer for mental health crisis cases), during which time all creditor contact and activity about the qualifying debts are stopped. The intention is to allow customers the time to consider alternative options suggested by debt advisers and to plan the best way forward. As a longstanding service provider in this area, Link has a long track record of working with customers in troubled circumstances to resolve payment difficulties.

In the months before launch, Link set up small project teams to consider the different account portfolios and how the new regulation would impact policies and procedures. Any required amendments to IT systems were an early consideration because of the need to build in sufficient  lead time. We were fortunate that our systems already allowed the flexible provision of 30 days or more breathing space and from that base, we were able to build policies and procedures to cover all our Primary Servicing and Special Servicing portfolio accounts for the new regulations.

With increased use of automation and technology in our industry, one of the challenges we faced was to ensure no contact was made with the customer during the moratorium period.  Suppression of the various channels of contact was necessary, but at the same time being able to respond to queries, handle any complaints and still send the statutory letters that were excluded from the scheme was needed.

As launch day neared, regular updates were shared by a central team and then disseminated to others across the business. Training help sheets were part of the preparations to familiarise those involved with what was expected. Although the account numbers involved were an unknown quantity, it was important that we geared up to cope with any and all potential issues. First line monitoring for accuracy and completeness was built in from the beginning as a daily process. We have supplemented that with second line validation of compliance (on an individual account level basis) which will shortly convert into a sample-based check.

We have yet to reach the first expiry dates, but our thorough preparations and early experiences so far give us cause for optimism, and we continue to provide all of our customers with empathy and support, just as we have always done.