Setting the standard

Chauntelle Wright considers how to get the most from a standard letter

This article was originally published in the March/April 2017 issue of Adviser magazine and was correct at the date of publishing.

What are standard letters?

Standard letters are not an innovation. Both advisers and creditors have used this approach for many years. The increased availability of online products and services means it is much easier to have standard or ‘canned’ responses to keep clients informed about their case.

The standard letter is a templated approach to routine correspondence. The letter is formed of regularly used standard text interspersed with placeholders that can be filled from case-recording systems using mail-merge, or similar tools, to adapt content to specific clients.

For example, a ‘holding’ letter (see below) is used by most agencies to alert creditors that an agency is assisting a client, to request information about any accounts held and to ask that enforcement is suspended to allow the agency to gather information. This correspondence will consist of a standard main text supplemented by the client’s personal details. The only requirement for the adviser or administrator is to complete the name and address of the client along with any pertinent references.

However, if there is any evidence that there are any ‘old’ debts that may be approaching the end of their limitation periods, care should be taken because standard holding letters may acknowledge liability for the debts and restart their limitation periods.

Creditors regularly use standard letters: for example, to comply with Consumer Credit Act notice requirements, or to alert a client to missed payments or to the potential commencement of enforcement. They are also employed when a debt has been transferred to a debt purchaser or debt collection company.

But how effective are these? Does a protracted exchange of template letters actually achieve any positive result?

I expect that I am like most advisers. I feel a great sense of indignation when a creditor responds to a carefully constructed, personally written, letter with a standard template letter. This generates a feeling of resentment. This feeling is not confined to the advice sector. A creditor will experience the same feelings when they have requested specific information about a client, only to receive a standard response in return.

So, when is it appropriate to use a standard letter?

Standard letters are best reserved for situations where the same text is used in every case. The holding letter is a good example. Also, as most advisers will use a similar procedure for each client, standard letters to their clients are useful to comply with the Financial Conduct Authority’s Consumer Credit Sourcebook requirement to keep them informed at every step in their case.

Standard letters are not usually appropriate for situations where an adviser is trying to persuade a creditor to agree to a particular course of action. In most cases, once a strategy for the client has been identified and an adviser is asking creditors to exercise their discretion, it may be appropriate to use standard paragraphs provided the letter is personalised; but a general standard letter simply will not suffice. In these situations an adviser will need to include a lot more information about the client’s particular circumstances.

It is also good practice to think about the situation from the creditor’s point of view and provide any information that you would want to see if you were the creditor, and address any predictable responses or arguments a creditor may raise.

In my role as a second-tier support adviser I have many examples of letters written by advisers across England and Wales and many are simply not appropriate for the circumstances. For example, one letter contained the following paragraph and little else: ‘As you can see, Mrs X is totally reliant on benefit income and therefore is unable to make any offer of payment. We therefore request a write-off of the account.’

This letter had been rendered into a standard letter format by the agency and was sent out in all cases where clients were on full benefits.

As a creditor your immediate reaction to such a letter would probably be to ask questions. Does this client have any assets or savings? Why are they on benefits? How long are they likely to remain on benefits? What agency is this?

When letters such as these are sent out they call into question the reputation, competence and experience of both the adviser and the agency. Therefore, care is needed when using standard letters.

Requesting a write-off

A standard letter requesting a write-off is not appropriate. Most requests for write-off are unlikely to be successful unless it is economically viable for the creditor or there is a situation where the client’s health condition is chronic or terminal. In all other cases the request is likely to be refused.

In the above case, a write-off request was a good strategy suggested by the adviser. Unfortunately the standard letter used is likely to have been rejected. A more appropriate letter for the client involved in the case would have been the one shown below, with considerably more information provided.

In this letter you will see that there is much more information for the creditor. This should prevent a standard outright rejection. It should also prevent a further series of letters asking and answering supplementary questions. Hopefully the creditor would have enough information to be able to exercise its discretion and agree to the request.

Conclusion

In a world of time constraints and pressures, it is easy to become immersed in process.

Standard letters are a useful tool for eliminating the inefficiencies inherent in routine, process-based, case management. But every tool has a limit to its effectiveness.

If we are trying to persuade a creditor to agree with the strategy we have chosen, we need to be able to give them a similar level of detail as was required for us to come to the decision in the first place. Using a standard letter in these circumstances is unlikely to achieve the desired outcome.

Demonstrating an understanding of creditors’ information requirements helps to build good relationships, and fosters co-operation and negotiation. This will reap rewards for our clients and ultimately for our work-life balance too.

By all means use standard letters, but use them wisely. Also, it is good practice to review them to ensure they are up to date and to remove text that is not relevant to the particular client.

Chauntelle Wright is a debt expert in the Expert Advice Team at Citizens Advice and is debt subject editor on the Adviser Editorial Board

This article was also published in Issue 180 of Adviser magazine (March/April 2017).

Sample holding letter

<Agency Address>

<Today’s Date>

Dear Sir or Madam,

<Case reference number>

We are acting on behalf of <Client’s name> of <Client’s Address>

Mr/Mrs/Ms <Client’s last name> has sought our help with their finances. Please find a form of authority attached.

We should be grateful if you would provide:

• A copy of the executed agreement
• A copy of any other document referred to in the agreement, e.g. bill of sale or insurance
• A full breakdown of account showing all transactions, including interest and charges
• Details of any enforcement action taken to date.

We request that you provide the requested information as soon as possible and agree to suspend any further interest, charges and enforcement on the account for 30 days in order to prevent our client’s position from deteriorating, and to allow us time to gather information and properly advise the client.

We look forward to your prompt response. We will contact you again once we have full details of the client’s situation and have been able to advise further.

Yours faithfully,

<Adviser name>

Sample letter for write-off request

Dear Sir or Madam,

As you are aware, we are acting on behalf of Mrs X in relation to her finances. Please find a form of authority attached.

We have received all the information that was requested and we have completed a financial statement. This is enclosed for you. As you will see, Mrs X lives in rented accommodation and has no assets or savings. She is totally reliant on welfare-benefit income and has been assessed as unfit for work. This is because she has Parkinson’s disease. This is a progressive neurological disease and it is chronic. Unfortunately Mrs X is reaching the advanced stage of the condition. This means her circumstances will continue to deteriorate and we attach medical evidence that confirms this prognosis.

You will see that in the financial statement there are higher than usual costs for laundry. This is because the medication prescribed to our client causes staining of bedding and clothing. The transport costs are also high because our client is susceptible to dizziness and falling. She struggles to walk any distance. Because of this she regularly uses taxis instead of public transport. As the condition progresses our client’s health will deteriorate further and her care needs will increase. Eventually she will require a carer 24 hours a day. This will have a further impact on her finances.

Given Mrs X’s long-term prognosis you will see that her situation will not improve and she will be unable to meet her contractual obligations with you. We would be very grateful if you would consider a write-off of the account on this occasion.

We look forward to hearing from you.

Yours faithfully,