Debtor Psychology“We All Benefi t”

International Collections Conference in PragueJune 2013

© European Credit Solutions 2013

Who are European Credit Solutions?

ECS brings together Executives with many years experience in the sector…

… and is at the hub of a network of Associates

David Hall (MD ECS, Commercial Director, Virgin Money)EVP and Managing Director (Europe) for Lindorff Group 2008-2011. Responsible for building out Debt Purchase and Collections business in Continental Europe and the UK, including taking Lindorff Spain from launch in 2009 to market leader by 2011 and securing a number of transformational acquisitions and bank carve-outs. Previously 12 years’ experience in retail banking across Europe as an Executive with RBS.

Tim Freeman (Senior Associate, CEO Sigma Group)13 years industry experience with Olympia Capital, Aktiv Kapital and Lindorff Group. Previously 10 years’ experience in securitization and M&A related to residential mortgages with Baring Brothers and 5 years establishing GMAC Residential Funding’s residential mortgage businesses in the UK, The Netherlands, Germany and Spain. Now CEO of Sigma Group (a PE backed debt purchaser and servicer in the UK)

Dr. Peter Gillies (Senior Associate, Owner GMD)A Change Management specialist with 20 years of international experience in a variety of industries. Previously responsible for building management teams and post-merger integrations in credit management in a variety of markets – including Spain, Germany, The Netherlands, Scandinavia and Latin America. Currently serving as Director Operations at Oxfam Netherlands

3

4

“Everybody Does It” – Experience Engineering

Framing

68%

16%0%84%

5

“Sounds like a Winner” – Loss Aversion

Payment Plan 1: €100/monthPayment Plan 2: €100/month + End-of-year Bonus Payment (+€100)Payment Plan 3: €200/month + End-of-year Bonus PaymentPayment Plan 4: €300/monthPayment Plan 5: €300/month + End-of-year Bonus PaymentPremium Payment: €500/month 

 

6

“A Recommendation, Please…” – Choice Architecture

Choice Overload:“Do you want bread with that?”“Sure.” (Thinking you will get a basket of sliced baguette)“Do you want it toasted?”“Um. No. No, thank you.” (Toasted?)“What kind of bread?”“What do you have?” (Now you’re in for it…)“We have rye, wheat, brown, 7-grain, white, Italian, and butter crusted.”

457

Payment Plan 1: €100/monthPayment Plan 2: €100/month + End-of-year Bonus Payment Payment Plan 3: €200/month + End-of-year Bonus Payment (Recommended)Payment Plan 4: €300/monthPayment Plan 5: €300/month + End-of-year Bonus PaymentPremium Payment: €500/month

7

“Here, Have one of These…” – Incentives

Endowment Effect Feedback Effect

8

“You’re Just as Smart as You Think You are…” – Final thoughts

Others are doing this already…

You are doing this already…

Debtor Psychology offers the

next level of sophistication

Framing, Loss Aversion, Choice Architecture, and Incentives

9

Thank you.