Government agencies ‘worst for aggressive debt collection’

A new report by The Treasury Select Committee says debts and overpayments are often pursued “over-zealously and uncompromisingly” by councils. In its report, it calls for public sector bodies to change the way they recoup debts.

A summary overview of the report says that people become over-indebted not just through conventional credit, but through arrears on bills, including those owed to the central and local government, such as council tax. Debt collection practices of public authorities have been described as ‘worst in class’; debts are often pursued over-zealously, uncompromisingly, and with routine recourse to bailiffs. This approach risks driving the most financially vulnerable people into further difficulty. The public sector should raise its standards to the level of industry best practice.

Gillian Guy, Chief Executive of Citizens Advice, said: “MPs are right to acknowledge that government agencies and local authorities are worst in class for debt collection when they should be leading by example. Reforms in 2014 were introduced to protect people from unfair practices, with a particular focus on how bailiffs collect debt.”

“It is clear these changes have failed. Citizens Advice has seen a more than 25% rise in bailiff problems since 2014 and helped 42,000 people with 98,000 issues last year. We need an independent regulator to protect consumers from unfair practice.”

Phil Andrew, chief executive of StepChange Debt Charity, who gave oral evidence to the Committee as part of its enquiry, said “The Committee is urging the Government to tackle the “over-zealous” pursuit of local authority debt as a priority. As the Committee observes, “the public sector should be leading by example in their treatment of the most financially vulnerable, but the current approach risks driving them into further difficulty.”

StepChange also agrees with the Committee’s conclusions of what the final debt “breathing space” scheme should look like. The Committee argues that Government should consider the case for extending the period to be covered beyond six weeks. It also states that “Given the role of non-credit arrears in problem debt, and the aggressive collection practices used by many public sector creditors, the case to include non-credit arrears in the breathing space scheme is overwhelming. The Committee can only offer its support for the scheme if its scope is expanded accordingly.”