Investigating arrears and recovering debts — iCan Qualifications Limited Occupational Qualification Accounting & Finance Revision
This element focuses on the skills required to professionally investigate payment arrears, communicate effectively with customers to identify root causes,
Topic Synopsis
This element focuses on the skills required to professionally investigate payment arrears, communicate effectively with customers to identify root causes, and negotiate mutually acceptable repayment solutions while adhering to relevant legislation and regulatory frameworks. Learners will develop competence in handling sensitive financial conversations, applying organisational policies, and ensuring fair treatment of customers in debt recovery processes.
Key Concepts & Core Principles
- Regulatory environment: Understanding the role of the FCA, Prudential Regulation Authority (PRA), and the Financial Ombudsman Service (FOS) in overseeing financial services and protecting consumers.
- Financial products: Knowledge of key products such as current accounts, savings accounts, credit cards, mortgages, insurance policies (life, home, motor), pensions (defined benefit and defined contribution), and investments (ISAs, unit trusts, shares).
- Treating Customers Fairly (TCF): The six TCF outcomes that firms must achieve, including ensuring customers are offered suitable products, receive clear information, and are not disadvantaged.
- Consumer credit: Understanding the Consumer Credit Act 1974, responsible lending, and the implications of the FCA's Consumer Credit Sourcebook (CONC).
- Ethical and professional standards: Adherence to the FCA's Code of Conduct (COCON) and the importance of integrity, due skill, care, and confidentiality in client dealings.
Exam Tips & Revision Strategies
- In role-play assessments, always begin by verifying the customer's identity and explaining the purpose of the call in line with data protection and conduct rules.
- Reference specific regulatory principles (e.g., treating customers fairly, conduct risk) when justifying your proposed solution to demonstrate applied knowledge.
- Use open questions to uncover underlying financial difficulties, and summarise the customer's situation before suggesting options to show active listening skills.
Common Misconceptions & Mistakes to Avoid
- Assuming the customer is at fault without thorough investigation of internal system errors or third-party delays.
- Failing to maintain a neutral, non-judgmental tone during customer interactions, which can escalate conflict.
- Offering solutions that breach regulatory guidelines, such as unsustainable repayment terms or pressure tactics, due to poor understanding of forbearance rules.
- Incomplete documentation of the investigation process and agreed solutions, leading to compliance risks and service failure.
Examiner Marking Points
- Award credit for demonstrating a systematic approach to identifying and documenting the source of payment discrepancies, including using account records and transaction histories.
- Expect evidence of professional communication skills, such as active listening, empathy, and clear explanation of the issue, tailored to the customer's circumstances.
- Learners must propose realistic, compliant solutions (e.g., payment plans, rescheduling) that balance customer needs with organisational requirements, clearly recording the agreed outcome.
- Assessment must verify knowledge of key legislation (e.g., Consumer Credit Act, FCA rules) and how it is applied in case studies or role-play scenarios when recovering debts.