Fitch Ratings has assigned Hoist Finance UK Limited (HFUK) an Asset-Backed Special Servicer Rating of ABSS2+, confirming HFUK’s leading position as a trusted debt resolution partner to individuals, companies and banks.
It joins its sister businesses in France and Germany who have also recently secured a similar rating as part of a Europe-wide ‘One Hoist’ approach to servicing excellence.
HFUK achieved three of the highest scores (i.e., commensurate with a 1 rating category) for the integrity of its administrative platform and control processes, and how it engages and interacts with its customers both digitally (e.g., self-service via a customer portal) and in person to ensure the best possible outcomes.
The bank was also praised for its robust business continuity procedures and disaster recovery plans, which have been used to good effect during the Covid-19 pandemic when HFUK was able to swiftly move staff to remote working.
Andy Simmons, Sales Director, Hoist Finance UK, says the rating shows how far Hoist has come in a comparatively short space of time: “With the streamlining of the business and introduction of more technology-led customer engagement solutions, the transition was always going to be a challenge,” he says. “This rating confirms the progress we have made since moving away from third-party servicing and focusing on servicing Hoist-acquired portfolios.
“It also confirms the integrity and excellence of our systems, our people, and our approach to creating real and meaningful dialogue with our customers and supporting them with amicable, sustainable solutions.”
In terms of the detail, Fitch says that HFUK operates a three-lines-of-defence risk-governance framework, which is commensurate with the ‘1’ rating category. The first line includes documented policies and procedures, two-person checks, and call-quality assessments carried out by team managers. Further controls are in the form of an independent quality-assurance function, which monitors calls across various risk segments, including complaints and queries.
The second line is the compliance and risk teams, which report to the group and work with the operational teams to ensure policies and procedures are clearly defined and in adherence with legal and regulatory requirements. Together with the operational teams, the risk and compliance teams monitor the efficiency of processes and controls in the daily operations to ensure that risks are appropriately mitigated.
The third line of defence is internal audit, which yielded three outstanding high-risk findings. HFUK’s loan administration processes, i.e., new loan set-up, cash management and reporting are highly automated, with appropriate controls in place limiting errors and delays. In its communication with borrowers, HFUK uses a Voicebot that acts as an interactive voice recognition system and allows borrowers to make payments, as well as get information about their accounts. HFUK also has a self-service portal that borrowers can use to review their accounts, make one-off payments, create and modify payment plans, agree settlements and modify basic personal information (i.e., change contact telephone number).
For its loan workout, HFUK uses a strategy-rules engine, which reviews all accounts daily and determines the most appropriate action to be taken on each loan using information from various internal (e.g., the collections platform, customer portal, telephony, artificial intelligence, and the asset management system) and external (e.g., credit bureau and publicly available information) sources.
Special-servicing processes are proactive with the servicing system monitoring performance and automatically generating emails, SMS, letters, and outbound dialler attempts, where appropriate. In determining the optimal recovery route, the servicer focuses on the borrower’s circumstances to determine their affordability. The credit committee, which includes members from the operational team along with representatives from compliance, legal and sales, meets monthly and reviews the outcomes of their strategies.
HFUK’s servicing platforms are well integrated with the key proprietary system and have effective automation. The servicer has sound cybersecurity procedures, with appropriate password controls, encryption, anti-virus and firewalls controls. Overall, the IT infrastructure is commensurate with the ‘1’ rating category.
Hoist Finance AB to which HFUK belongs, is a Swedish debt-restructuring company, founded in 1994, listed on the Nasdaq Stockholm since 2015. The group has servicing operations across 10 countries in Europe, which manage residential, commercial, other secured and unsecured loans.