Recent figures from the Bank of England seem to indicate that we are heading for a fresh household debt crisis in the UK. People are borrowing at the fastest rate in almost a decade as confidence in the economic recovery grows. Consumer credit rose by £1.2 billion between September and October, putting the annual growth rate at 8.2%.

The situation is now getting to the point where the Financial Policy Committee is considering action to curb the unsecured lending market and stem the ever increasing mountain of consumer debt. While these measures may help to alleviate the situation, it is also very evident that companies involved in financial services need to have  robust collections policies and processes in place that are at the same time fair, transparent and take into consideration the individual circumstances of each person struggling with debt.

The FCA recently estimated that the number of people in ‘serious debt’ in the UK could be as high as nine million. A company’s responsibility to its customer is of huge importance if we intend to learn from the mistakes of 2008 onwards. Regulation, common sense and business acumen all demand it. For many people this means digital first, with stressful calls, face to face meetings and piled up letters becoming a thing of the past. Indeed, our own research found that a third of people would always choose an online option as their primary port of call when managing debts.

The benefits of the digital first approach are wide ranging for both the individuals in debt, as well as the company when done in the right way. The most important positive for the individual is the sense that they are taking control of the situation, rather than feeling hounded in what could be a stressful and embarrassing time. The importance of this really cannot be underestimated - it is empowering for the individual and also provides a much better opportunity for a positive final outcome.

Businesses also need to remember that while people may fall on hard times there is nothing to say that they won’t become a profitable customer in the future and the collections process can either represent a future brand ambassador or turn them off your brand forever.

The additional business argument for online collections is also compelling on its own. Online collections can not only speed up the whole process, they can also increase recovery rates and reduce operational costs.

Furthermore, this is not just reserved for the digitally-savvy millennials. We are seeing a trend of people of all ages turning to the online option to gain control of their finances. There may be another gathering storm of consumer debt but a solid collections strategy can held guide customers, and ultimately businesses, to calmer waters.