Most banks have, over the years, acquired a variety of high-risk assets. As part of a general portfolio in more stable times these assets have been valuable. In today's economy too many of these assets represents an unacceptably high level of risk. Disposing of some is a strategy that not only removes a degree of the risk from the banks, but also releases much needed capital back onto the balance sheet. This is a responsible approach that will also do much to elevate the banks in the eyes of the regulators.
Wescot knows that
compliance has become a key element of any bank strategy since the
collapse. Regulators and legislators are
just looking for reasons the clamp down hard on risky behaviour. One of the best ways for banks to alleviate
this pressure is to actively demonstrate an awareness of and dedication to the
principles of TCF, or Treating Customers Fairly.
If
banks can flow these principles into their debt sale, collection and recovery
processes the benefits will be two-fold.
First, the regulators will be satisfied, and second, a focus on good
procedural practice will deliver better all-round results to the bank. This should apply not only to internal
policies, but also up and down the supply chain. Any organisation involved in assisting the
banks in their debt management should as a default embrace TCF principles at
their core.
Finally,
the wholesale adoption of the requirements of Basel III by banks will do much
to engender confidence in the ability of the banking sector to respond to
criticism in a positive manner. To
protect their assets from future fluctuations in the sovereign debt markets,
banks need to ensure that their equity and capital levels remain healthy. Disposal of high-risk assets and more
effective, customer-focused debt management are key enablers of this strategy.
Wescot have over 40 years
of experience in debt collection, and their own strategic approach to risk
management allowed them to weather the storms of the last 5 years relatively
unscathed. Banks seeking to re-establish
confidence and protect their future positions may be wise to consider these
suggestions for risk management put forward by one who knows.
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