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Since COVID-19 began its spread across the globe, financial institutions have grappled to adapt their collections activities to assist the millions of consumers experiencing financial distress as a result of the pandemic. In Canada, more than two million jobs were lost in April alone, and collectors have faced some unique challenges with the federal government requiring them to suspend any collections activities on new debts until further notice.
The brunt of the fallout — lost wages and lost revenue — has been kept at bay as Canada’s federal and provincial governments stepped forward with financial support, loans, grants, and access to credit for Canadian consumers and businesses alike. For financial institutions, it has provided long-term stable funding that banks and mortgage lenders can use to continue supporting their customers in their time of need, while instituting special directives that allow for limited collection activities such as flexible payment arrangements and deferrals.
However, the government support, deferral periods, and flexible payment arrangements will eventually end and collections activities will resume — albeit in a significantly modified form. As the economy continues to reopen, Canadian financial institutions and businesses will again have to adapt their debt collection, risk consideration, and customer communications as we move into the rebuilding phase.