Lenders who operate across the European Union (EU) must juggle a range of regulatory requirements regarding their debt-collection strategies and processes. And oftentimes lenders must be able to react quickly to new regulatory requirements. For example, some EU countries limit how many times debt collectors can contact individuals each month about their past-due accounts. Others have no such limitation. Some countries allow automated phone calls to come from different mobile numbers, while others prohibit this technique.
These details may seem trivial, but when you are setting up automated telephone and other contact strategies for more than 5 million customers across several countries, they’re not—especially considering that these are the regulatory breaches that often lead to lawsuits.
Few EU-wide Regulations
In the wake of General Data Protection Regulation (GDPR), an EU-wide set of rules surrounding data privacy that went into effect this year, it’s easy to forget that regulations covering the entire EU are the exception and not the rule. As anybody knows who does business across EU member states, there are major differences between them. Language, regulations, currency, business culture—each of these must be considered when working internationally, especially in the world of debt collection.
Katabat has helped several clients globally to streamline its digital debt collections and customer service processes despite working in different languages, currencies, and regulatory frameworks.
In debt collection, the laws of the country where the debtor is located are the ones that apply. This includes any regulations surrounding authorisation as well as rules about prohibited actions (such as what times of day a lender is allowed to call).
Different Levels of Complexity
The Euler Hermes Group produced a report titled International Debt Collection: The Good, the Bad, and the Ugly. In it they assessed, scored, and ranked 44 countries on their debt collection procedures. Each country was assigned a complexity score based on local payment practices, local court proceedings, and local insolvency proceedings. What they found was a broad range when it came to the complexity that international traders and lenders could expect.
Germany and Slovakia – located just 1,000 km apart — rank at opposite ends of the spectrum, with Germany considered “notable,” or one of the least complex, while Slovakia is classified as severe, or very complex. A lender with borrowers in both countries would need a very different approach in each to avoid a regulatory breach.
What challenges has your organisation faced with regulatory differences across different countries and how did you resolve them?
Jackie Kilner is the Head of Sales for Katabat’s EMEA region and is based in the United Kingdom. If you’re interested in discussing personalising your collections efforts across the EU on one unified platform, you can contact her at firstname.lastname@example.org