York Student Millie Houlton recently achieved what many have long considered impossible; she was able to have a council parking fine overturned. How did she do this? Was it intricate knowledge of the council's inner workings, or detailed knowledge of parking law? No, it was the latest phenomenon and buzzword bingo favourite; ChatGPT.
For those unfamiliar, ChatGPT is, in its own words: “a large language model trained by OpenAI based on the GPT-3.5 architecture. I am designed to respond to natural language input, such as text-based questions or statements, and generate human-like responses. My training data comes from a diverse range of sources, including books, articles, and websites, and I have been trained on a wide variety of topics. As an AI language model, my goal is to provide helpful and informative responses to users' inquiries.”
Simply put, it is an artificial intelligence program to which users can ask questions and it will respond as if it’s a human being. An incredibly useful tool for anyone searching for advice, looking for information or shortcuts for previously lengthy processes. Millie was able to input all of the detail on her parking when the fine was handled and, in a matter of minutes, had a perfectly formatted and personalised response.
So, what does this have to do with debt resolution and collection?
With more and more customers experiencing financial hardship and StepChange recently reporting a 25% increase in debt levels and 20% more clients seeking debt advice for problem debt from 2021 to 2022, the debt advice sector is increasingly squeezed and may struggle to handle the volumes of customers requiring support.
Young people are increasingly struggling with debt, CAB Scotland reports that the level of debt for young people has doubled since 2004 and is increasing at double the rate for any other client age bracket. With UK debt recently passing £2TN (PWC) and, a staggering 1/4 of the UK not seeking any financial advice or information from anyone there is a vast advice and information gap within the UK population. The ability of Large Language Models to clearly and concisely explain complicated subjects to consumers, combined with 18-34-year-olds being twelve times more likely to use digital channels and social media for advice (/r/ukfinance/ is well worth a read) opens up ChatGPT as a significant resource for consumers and creditors alike.
Like any new innovation, it presents challenges and pitfalls for customers. I recently took to GPT to ask about debt advice and the results were both encouraging and potentially concerning. When asked about how to deal with debt collectors, I was presented with the below:
As I said, a mixed bag here. On the positive side, anything that encourages engagement between the creditor and debtor must be encouraged and celebrated. Customers burying their heads in the sand as their financial situation worsens is hugely detrimental and often creates longer-term issues, as should signposting to advice. The UK’s financial literacy leaves a lot to be desired and specialist support can offer significantly better outcomes. From a creditors side, this could create a lot more work, for validation and DSARS. ChatGPT helped me to write an excellent DSAR request, just as it helped Millie with her speeding ticket.
On the less positive side, there is mention of the Fair Debt Protection Practices Act, which is a US specific law and could mislead customers and make them believe that they have rights or may be at risk of consequences that are not relevant to the UK market.
Furthermore, there have been a number of detailed analysis on ChatGPT to assess consistency and accuracy of the responses. The results, to put it mildly, have been mixed. Jack Caulfield from Scribbr comes to the conclusion that “though its language capabilities are impressive, the accuracy of its responses can’t always be trusted. We recommend using ChatGPT as a source of inspiration and feedback – but not as a source of information.” This is hardly encouraging for something with as much potential risk as debt collection.
As with many new technologies, ChatGPT still has a fair way to go and will require more refinement to offer customers accurate and fair advice. That said, with the right guardrails in place, customers could be equipped with error-free, up-to-date debt advice in an instant. And the results of that could be truly transformational.