Credit, Collections & Insolvency News
It’s ten years since Taking Control of Goods Regulations came into force. The regulations are used to define and measure the work of enforcement firms, but they are basic and no longer reflect modern enforcement practices. So what more is needed?
The industry has been on a path of reform since the review of civil enforcement agents in 1992, followed by the seminal Beatson report in 1998 – which was the launch pad for the drive for consistent standards and service. Since then, there has been a steady stream of 13 reviews, consultations and inquiries.
The regulations for taking control of goods introduced in 2014, supported by a voluntary set of National Standards, were a significant development that was welcomed and adapted by enforcement agencies. At the heart of the reform was the principle of fair and proportionate treatment of people in debt, with special attention to those who may be vulnerable. Along with an extensive training and certification process for enforcement agents, a new fee structure meant the charges for enforcement were fixed by statute and the operation of enforcement agents was highly prescribed.
The regulations were the catalyst for a transformation that has included a new independently monitored code of practice, the establishment of the Compliance, Adjudication and Review of Enforcement (CARE) Panel and the launch of the Enforcement Conduct Board.
The economic background to the reform was the credit crunch in 2007, followed by the abolishment of council tax benefit for low-income households in 2013. This gave local authorities the freedom to design their own council tax support schemes, which coincided with years of austerity to compensate for the impact of the financial crash. With less funding from central government, local authorities needed to maximise revenue and residents were pursued for long-standing debts , with some households paying council tax for the first time.
Following the pandemic, enforcement agents have encountered more cases of financial vulnerability and more people experiencing problem debt for the first time. Therefore, there has been more investment in the enforcement process to discern the best response to individual cases. Put simply that means identifying earlier those cases that should be returned as not appropriate for enforcement action.
As a consequence in around 24% of unexecuted cases for council tax and 60% of parking cases enforcement agents are unable to locate the debtor after trace enquiries. Cases in which an individual has no means to pay and no goods of any value accounts for approximately 39% of cases for council tax and around 11% for parking debts. In 5% of parking cases enforcement is not actioned.
But can more be done to segment debtors to identify those that can pay?
Years of experience recovering “hard to collect” debt successfully tells us that the key to debt resolution is communication. By establishing on-going dialogue and engaging debtors in a way that meets their requirements we can reduce missed payments. Sustainable repayment plans require investment in multiple channels of communication.
The customer journey has been digitised with a choice of communications channel based on accessibility at all times of the day – both self-service and assisted. Debtors that cancel a call are prioritised for SMS webform and trackable email. Live webchat is available for people who find face-to-face or over the phone conversations difficult. Bespoke, tailored SMS webforms and chatbot AI technology, incorporating nudge theory techniques, are all used to encourage engagement and debt resolution.
Under the 2014 regulations a new “compliance stage” was introduced to reduce the number of cases resulting in an enforcement visit. After sending a Notice of Enforcement, the compliance stage comes before an enforcement visit and is a minimum of seven days but can extend to up to 30 days. The use of advanced technology solutions at the compliance stage is the same as that used by debt collection agencies and is embedded in standard enforcement processes.
In the decade since the 2014 regulations were introduced, the compliance stage has evolved with firms seeking to engage debtors, identify vulnerability, assess income and expenditure, maximise income and benefits, profile for propensity to pay, ensure repayments are sustained. A significant achievement for the recovery of hard to collect debt.
The impact of The Taking Control of Goods 2014 and the industry-led reforms that followed in subsequent is evident in the enforcement experience.
There are fewer customers that have doorstep visits and therefore only incur the minimum fee; repayment plans are fair and reasonable, which reflect ability to pay – around 60 percent of council tax debt is recovered through repayment plans. Complaints levels remain low due to the simplified process and fixed transparent fees, as well as the widespread use of body worn video. In addition, firms have implemented Improved awareness and training in all aspects of vulnerability and the development of specialist welfare teams. All enforcement agents receive externally verified training and are certificated every two years before a judge. The industry is supervised to high standards by an independent oversight body with powers to act; and there has been significant investment in technology to maintain engagement levels and establish professional standards within the enforcement sector.
The launch of the Enforcement Conduct Board in 2022 brings a new level of principle-based oversight and for the first time there will be independent analysis to uncover any evidence of systemic issues with the process. CIVEA and its members were the architects of an independent oversight model and, in collaboration with the debt advice sector, will ensure that anyone with unpaid taxes, fines and penalties will be treated fairly.
Civil enforcement is an essential feature of the justice system, and the 1500 certificated enforcement agents that recover monies owed to central and local government are highly professional and act responsibly. The past ten years has proved how our industry can adapt and step up in response social and economic conditions to ensure that local services are properly funded.
