Spring has definitely brought forward some green shoots, with last month marking the gradual lifting of restrictions across the UK with hope of more – certainly a positive step in the path to normality.
Despite the restrictions imposed by the pandemic, for Lowell, the first three months of the year have continued to show great progress, demonstrated by a strong set of results. In the UK, Lowell delivered on all our key expectations during the quarter, from growing collections to making strong progress on our digital transformation, colleague agenda as well as ensuring a strong balance sheet. This all delivers a performance that offers a sustainable platform for further progress in the coming months.
Our strong collections performance in the first quarter meant cash EBITDA in the UK rose by 3% over a year earlier, and our prediction, at a Group level, is there will be close to £1.2bn of collections remaining in the next two years.
Our cash income was healthy in the first quarter – it was flat over the same period a year ago and compares to a period before the pandemic first locked the country down. It’s very encouraging that we have already returned to last year’s level.
We are continuing to look for ways to further increase our efficiency levels across the business, leveraging both intelligent automation and improving our digital offering to our customers which has delivered strong cost efficiencies both in the UK and across the wider Group. Our digital transformation agenda continues to be very well received by customers, with digital-led collections growing by almost a third in the first quarter over the same period in 2020.
Lowell’s investment in its digital operations, which offer more choice for consumers in how they engage with us, means we now lead the sector in online services. But it’s worth stressing that personal contact with clients and customers remains absolutely vital for our business when dealing with as sensitive an issue as debt. Those we work with often want to talk through their personal situations with an expert who understands and can come up with a tailored response for the best possible outcome. We are confident we are delivering against our customer’s expectations, evidenced by our strong Trustpilot feedback, with over 12,000 reviews and a rating of 4.5 stars.
Beyond this strong set of performance results, in March we launched the Financial Vulnerability Index. This joint initiative with the Urban Institute led us to create a new, bi-annual data tool that tracks changes in the ability of households to manage daily finances and adapt to sudden economic changes.
The tool and data, which are free to access, offer a much clearer picture of the financial health of the UK – many of the existing measures are out of date or too narrow in scope – from a national and regional level all the way to individual parliamentary constituencies. The initiative aims to support policy influencers tackling financial vulnerability, resilience, and problem debt across the country.
The Index has opened the door to long-term collaboration with influential stakeholders from government to charities, NGOs to think tanks. We have paved the way for further engagement with key players, and have met with the Treasury, MaPS, StepChange and beyond to discuss our findings in more detail and drive positive change.
We hope this data can shine a light on this critical issue at a critical time and inform a better, more joined-up response to areas of increased financial vulnerability on a national scale.
This is all part of Lowell’s commitment to drive real, long-lasting change in the industry and push for better industry standards. This includes undertaking research projects, bringing together and informing influential policymakers and other key players, and helping to shape policy that improves consumer credit in the UK.
Lowell’s ongoing partnership with the Centre for Social Justice, a think tank with significant convening power in consumer credit policymaking, is just one way we are continuing to push for increased standards. We are also scoping a number of additional collaborative opportunities with other organisations to drive substantive change in consumer credit.
The Lowell way is one of high standards and a commitment to fair and ethical customer practices. We believe that customers need never pay a penny more than is owed and we are passionate about helping them out of debt and back to financial health in the best way possible.
During the first quarter, Lowell has also made significant progress in reporting its sustainability work. We carried out a thorough review of potential frameworks for the business and have chosen the Sustainability Accounting Standards Board. SASB has a high degree of credibility with investors and fits well with our business.
We are making good headway in professionalising our reporting on sustainability; we are setting the benchmarks that will underpin the strategy and will share more in-depth information in our half-year results. We will also introduce performance metrics to measure the extent to which the business is better for customers, has better ethics and standards, and acts as a responsible business.
We believe a good business is driven by happy and healthy colleagues, and we are always looking at ways to create the best environment for them to thrive. Most recently that has included the introduction of a wellbeing day, and we also invited Dr Sarah Hattam from Concilio to deliver sessions on child and parent mental health to help our working parents get through the return to home schooling over the first three months of the year.
Our colleagues are the heart and soul of the business. After perhaps the most challenging year in living memory, I could not be prouder of their professionalism and dedication from our whole team to making credit work better for all.