Reconnecting lenders to non-responsive interest-only customers

Trace & Connect have successfully ran numerous campaigns that have outstripped industry contact rates and increased lender response rates by +66%.

Lenders face a potential tsunami of interest-only bad debt risk.

It has been well reported about the impending issues relating to interest-only mortgages sold during the period of booming house prices and relaxed lending criteria.

Outstanding loans are due to mature in three key waves, The first will hit in 2020 with FCA research indicating these borrowers will be close to retirement age and more likely to have a higher income or accumulated wealth than those who signed deals after 2005.

The second and third phases offer the biggest risk, as these borrowers typically ‘stretched’ their affordability to purchase bigger homes and take advantage of house price inflation – just prior to the financial crash and collapse of the property market.

Fortunately, there is still adequate time for borrowers in ‘waves 2 & 3’ to create a repayment plan – which in-turn will help meet lender obligations and potentially reduce bad debt provision.

Early intervention and two-way communication is critical, however the FCA suggests the majority of borrowers are not responding to traditional lender communications and as many as 14% may no longer be living in the property.

Just three out of ten interest-only borrowers respond to lender contact

Lenders are under increasing regulatory pressure and scrutiny to ensure customers with interest-only loans have a robust repayment plan at the end of their term. Industry reports suggest more than two-thirds of customers are failing to reply to traditional lender contact – leaving a huge black hole of doubt.

Early and frequent contact is essential to ensure lender obligations are met and comply with Principle 6 of the FCA Principle for Businesses – “A firm must pay due regard for the interest of its customers and treat them fairly”.

Establishing two-way communication enables the lender to assess affordability if any variation to the existing agreement significantly increase the monthly payment, or, extends the term into retirement.

The FCA also expects the lender to contact the customer and obtain agreement – if they aim to switch the loan from interest-only to repayment.

Positive, early customer contact will act as a potential impairment indicator and enable lenders to accurately allocate their bad debt provision.

Trace & Connect will put you back in touch with more customers which in turn will support regulatory and customer obligations.

The fast, easy and compliant way to re-connect with interest-only customers.

Trace & Connect has a team of specialised staff with a range of sophisticated tools, meaning the large proportion of your customers can be contacted quickly, effectively and fairly.

We expect to make telephone contact with 40 – 60% of your customers. Once contact is made, our system enables us to directly transfer customer telephone contact to your administration team, or make arrangements for you to call your customer back on the correct number at an agreed and convenient time. This allows you to utilise internal resources effectively, meet regulatory objectives, re-engage with your customers and potentially reduce your bad debt provision.

Instances of unauthorised letting may be highlighted – enabling lenders to correctly charge for the debt. Inadequate repayment plans could also be identified earlier, giving both lender and customer more time to consider and prepare alternative arrangements.

A significant number of customers may have moved out of the mortgaged property. Trace & Connect are able to locate their new address and telephone details, then make contact and ‘hot-key’ the customer call to the lender.

Trace & Connect consistently achieve dramatic results.
After the first point of customer engagement by the lender (letter/phone call) has returned circa 30% response – we have gone on to establish contact with, or provide positive updated details for 80-90% of those previously deemed – ‘Non-Responders’.

No result – no fee

Our specialist team and sophisticated data interrogation tools will help lenders:

> Contact a far higher percentage of customers than using internal resources.
> Improve compliance with regulatory TCF requirements.
> Establish customer contact earlier – allowing improved repayment planning.
> Identify interest-only customers who do not have a repayment plan in place.
> Reduce provisions for potential impaired indicators.
> Correctly charge for specific risk (e.g. unauthorised letting).
> Update customer database (correct telephone numbers, correspondence address etc).
> Free up valuable resources – allocate staff to other tasks.
> Reduce Bad Debt Provision – where customers with repayment plans are identified/established.
> Re-engage with customers – protect brand reputation.

Trace & Connect only charge for positive results.
No updated customer details = No charge.

Proven solutions that deliver above industry contact rates.

Trace & Connect employ a unique combination of technology and investigative expertise that is unrivalled in larger more automated competitors.

“66% uplift in contact rates with leading UK mortgage lender.”

Following initial contact attempts made by the lender using multiple communication methods, Trace & Connect improved contact from 30% to 65%, whilst ensuring compliance and sensitive customers were not unduly stressed by contact. This was achieved even though our work was only with non-responders from all the other contact activity.

Read the full case study here. Enter your details below to download your copy:

“David’s insight and experience has enabled the business to achieve exceptional results in contacting interest only customers. This has placed us in a strong position to manage our risk and as they are expert at finding even the most difficult to contact customers, we are also able to help these customers who are often those with no repayment strategy towards better outcomes. An unexpected benefit from Trace & Connect’s work has also identified customers who require contact due to other circumstances where vulnerability or terms & conditions issues need to be addressed.”

Mark Howell, ex Bank of Ireland

To discuss how you could improve your contact rates, reduce costs and improve customer relationships call Christopher Thompson on

01484 722995