Context
There is evidence that a substantial proportion of UK households struggle to keep up with their financial commitments. As a result, there is considerable interest within the UK credit industry, the advice sector and government, in identifying and helping people before they get into more serious financial difficulties. One such service is the Customer Review Team (CRT), a ‘pre-arrears’ service offered by Barclays to their customers – typically customers with a personal loan or overdraft who are showing signs of financial difficulty. There is little evidence, however, about how customers feel about this type of help, and about what form the help should take. This research investigates the CRT service, and the people that have had contact with it, in order to fill this evidence gap.
The study
Barclays commissioned this research, with the support of the Money Advice Trust, to understand more about customers who have had contact with the CRT, and to understand the impact of pre-arrears support. The research comprised quantitative and qualitative stages:
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Quantitative stage: Analysis of the anonymised data of over 28,000 customers who had had contact with the CRT, profiling those customers and looking for differences between those who were proactively contacted by the CRT team and those who contacted the team themselves.
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Qualitative stage: Four focus groups and 36 face-to-face depth interviews with customers who had had contact with the CRT. The profiles of the customers chosen for the qualitative stage were similar to those seen in the quantitative analysis. The qualitative stage looked at causes of financial difficulties, the impact on customers, how customers engage with creditors, their outcomes and what they want from such a service.
Key findings
Key findings included:
- Profile of those using the service: People who voluntarily contacted the CRT were more likely to be unemployed than those who were identified and contacted by the service. Women were also more likely to voluntarily contact the CRT than men.
- Causes of financial difficulties: The majority of the 36 customers interviewed said their difficulties were income related – either a drop in income (for reasons including unemployment, redundancy, ill-health, relationship breakdown or cuts in working hours) or fluctuating or low income.
- Impact on customers: Customers described being in financial difficulties as stressful and causing anxiety, and in some cases, putting strain on personal relationships
- How customers engage with creditors: Customers generally welcomed proactive contact from the CRT and 80% went on to work with the team to resolve their financial issue. There were demographic factors that predicted whether customers would engage with the CRT once they had been contacted; customers in their 40s, unemployed or retired, and on lower incomes were most likely to engage.
- Customer outcomes: Overall the picture was positive with customers typically agreeing to a payment plan, and being in the process of repaying, or having repaid, their loan or overdraft. Other positive outcomes were feelings of relief and reassurance and changes to their money management.
- What customers want: Customers described the ideal pre-arrears service as having three elements:
- Getting in contact: this should happen early, before the customer is in difficulties, and not involve big telephone bills for the customer 2. Customer relations: service staff should be understanding, polite and friendly, and customers should always be able to deal with the same individual 3. Help and support: service staff should be well trained and knowledgeable, have the authority to take decisions, take a collaborative approach with the customer and then keep in touch after the intervention to check how the customer is managing.
Points to consider
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Methodological limitations: One limitation of the research is the lack of any interviews with the 20% of customers who didn’t engage with the CRT once contacted. From the quantitative research, the report states that these customers didn’t feel that they were in difficulties but we can’t know why they were different from those that did, nor can we know anything about their outcomes. Another limitation is that it only targets customers who have taken out loans or overdrafts; customers without these products may also be at risk and may have a different profile or different needs.
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Relevance: Highly relevant as preventing consumers getting into financial difficulties is preferable to helping them once they are in difficulties.
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Generalisability/ transferability: The study included only Barclays’ customers, but is likely to be transferrable to customers of other banks and financial institutions. However, as stated above, customers targeted were those with loans and overdrafts; customers with other types of credit products, such as credit or store card, or other debts may have different needs.
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Applicability: This report is applicable to anyone with an interest in consumer debt and financial difficulty, such as providers of credit, those in government, support agencies, policy makers, regulators or educators.
Full report
Understanding financial difficulty - full report
