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14 Jul, 2017 | Fred Crawley
In a look at public sector collections, I look at the government’s hypocrisy on imposing conduct standards local authorities don’t follow.
Let’s not beat around the bush with a long-winded introduction here: The UK has a serious problem with double standards when it comes to public sector collections.
While the last five years have seen lending businesses move mountains to ensure they’re giving customers in arrears a fair deal, and utilities firms have worked double time to reach parity with them, local authorities have sailed off on their own course, taking a harder and harder line when it comes to enforcement.
Back in March, a coalition of charities so numerous it would take the rest of this paragraph just to list launched a report in parliament entitled Taking Control, which stated bluntly that 2014’s bailiff reforms have barely touched the sides when it comes to protecting debtors.
The report found a quarter of those who had been visited by bailiffs had attempted to arrange repayment by phone, but had been visited anyway, due to enforcement fee structures incentivising home visits. What’s more, a fifth were not even contacted before the visit, in contrast to the requirements of 2014 regulations.
The report has plenty more to say, but the gist is clear: This is, overwhelmingly, a local authority issue. Of 82,000 bailiff issues referred to Citizens Advice last year, 57,000 were due to council tax enforcement alone.
It’s a growing issue, too: In 2014/15, the last period for which figures appear to be available, local authorities in England and Wales passed 2.1 million debts to bailiffs - an increase of 16 percent on the previous year. In Kent alone during the 2015-2016 period, bailiffs were used to recover council tax debt 36,527 times, a more than 10 percent rise on the previous year.
When you’re immersed in the enormous cultural effort banks have made to create a fair collections environment, it seems drastically wrong that things are headed the other way in the public sector.
After all, the government set the FCA’s agenda for financial services reform, so why is it looking the other way when it comes to its own actions?
Given that councils have multiple channels of interaction with residents, concerning the most basic needs such as accommodation, surely they should be leading best practice in collections conduct? Shouldn’t they be leading the private sector, rather than the other way around?
It’s easy to wag a finger at councils, but this can’t all be blamed on local government; this is, at heart, a party political issue. If the government continues to cut councils’ budgets, demanding they manage their finances better, is it any wonder they enforce too heavily to claw back revenue?
Virtually every single charity involved with debt is making a noise about this - and so are we. In March, Yvonne Fovargue MP tabled an early day motion calling for government departments to integrate the Standard Financial Statement (SFS) in their debt collection processes.
But where is the issue of public sector collections in the election manifestos of the major parties? With council tax rates set to rise further, plus billions more in government debt due to be outsourced to the private sector, this should be a hot button issue in parliament. But the silence is deafening.
The reforms that the charities behind the Taking Control report are suggesting are admirable - including an independent regulator for bailiffs, a single complaints mechanism and a restructuring of bailiff fees.
But until government takes a long, hard look at how it treats its own customers, it leaves a sour taste in the mouth to see how much it expects of the financial services sector.
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