Credit, Collections & Insolvency News
A new report from the Centre for Social Justice has unveiled a partnership between bailiff firms and debt advice charities to help people in ‘severe’ debt, which is a third higher than before the pandemic began,
The bold plans to strengthen protections for households facing a post-pandemic tidal wave of debt have been brokered by a leading think-tank.cIn a ground-breaking move, organisations representing enforcement firms and charities devoted to helping hard-up families have worked together to ensure people caught in a Covid debt crisis do not face unfair treatment at the hands of bailiffs.
The plans have been devised by a new independent body, the Enforcement Conduct Authority (ECA) to stamp out harmful debt collection tactics and help vulnerable people in arrears get their finances back on an even keel.
The initiative, engineered by the Centre for Social Justice (CSJ), has been welcomed by Government and is backed by former Cabinet minister Nicky Morgan. Morgan said “It is a stunning achievement of the enforcement and debt advice sectors to have come together to collaboratively develop the Enforcement Conduct Authority with the CSJ.”
“To their credit, proponents of reform in the enforcement industry have listened to concerns about standards of conduct, likewise debt advice charities have worked pragmatically to better protect vulnerable people from harm.”
“The ECA’s potential is unlimited. With a strong mandate to ensure the fair treatment of people in debt, it will provide independent, fair and formal supervision of enforcement. Developing new protocols on vulnerability and affordable repayment, the ECA will ensure that people experiencing enforcement are put on a more sympathetic and sustainable path out of debt.”
The move comes against the background of dire warnings by experts about the scale of the debt mountain racked up by the poorest as the country has battled Covid. While wealthier families made record savings from reduced household spending, the charity StepChange reports the number of Brits in ‘severe’ debt rose by over 600,000 to 2.4 million in the first year of the pandemic alone.
CSJ analysis of new official data shows the amount of outstanding council tax grew by a record 24 per cent between March 2020 and March 2021, reaching £4.4 billion.
Further research by the Money Advice Trust shows more than seven million people in Britain (14 per cent) are worried about being able to afford their council tax bills over the next year. More than a quarter of clients supported by debt charity Christians Against Poverty attempt or consider suicide as a way out of their debts before seeking help.
In a new report, Taking Control for Good, the CSJ warns “What looms ominously on the horizon is no less than a tidal wave of debt. As payment deferrals and the furlough scheme end, the Money and Pensions Service anticipate a 60 per cent rise in the demand for urgent debt advice . . . [and] councils will undoubtedly be ramping up efforts to recover the £4.4 billion of arrears sitting on their balance sheets.”
“What this means in practice is that, in the months and indeed years ahead, tens of thousands more people are expected to receive a call or knock at the door from a bailiff.”
Against this grim background, the CSJ warns it is critical that enforcement is carried out fairly, effectively, and in a way that helps people bounce back from the travails of the pandemic.
The CSJ applauds moves by the debt advice and enforcement sectors – often at loggerheads in the past – to work together to raise standards, protect vulnerable people, and ensure the industry is fit to meet the challenges of the coming decade. The report sets out the framework for a new, independent and fully-funded oversight body responsible for pushing:
the continued professionalisation of the enforcement sector;
measures to address inconsistent and sometimes inappropriate enforcement agent behaviour;
reform to the ‘fragmented and hard to navigate’ complaints system, and;
measures to bring the whole of the enforcement industry into line with wider advances in the treatment of people experiencing hardship or other vulnerabilities.
The ECA will be launched later in 2021 and deliver a clear mandate to ensure fair treatment and appropriate protection for people subject to enforcement. This includes:
In April 2021, the Government committed to reviewing the case for putting the ECA on a statutory footing, which the representatives of the enforcement and debt advice sector have said would realise its “full potential”.
Andy Cook, Chief Executive of the CSJ, said “Britain faces a tidal wave of national and individual debt, increased by the economic challenges of containing a pandemic. Problem debt ruins lives. It tears families apart, places a strain on employment, and can even lead people down a path to alcohol and substance dependency.”
“The Enforcement Conduct Authority developed by the CSJ with the debt advice and enforcement sectors will empower bailiffs to carry out their duty to courts, creditors and taxpayers fairly, while equipping them with the tools to support vulnerable people on a sustainable journey out of debt.”
Gareth Hughes, Chief Executive of Marston Holdings, said “The Enforcement Conduct Authority, with its substantive scope and wide powers, represents the kind of breakthrough reform that happens once in a generation. It will raise standards, spotlight good practice and improve safeguards. It will also ensure the integrity of key principles that underpin the Taking Control of Goods Regulations.”
Joanna Elson CBE, Chief Executive of the Money Advice Trust, said “These welcome proposals for an independent Enforcement Conduct Authority move us closer to the protections that are necessary for people experiencing bailiff action, for which we have been campaigning for many years.”
“The focus now must be on supporting the body to deliver its clear mandate to raise standards in enforcement and better protect people in debt. This includes Government – who must now step up by ensuring the Enforcement Conduct Authority has the powers it needs to be as effective as possible.”
Russell Hamblin-Boone, Chief Executive of the Civil Enforcement Association, said “We are committed to working with the Enforcement Conduct Authority and to ensure its success. We have a duty to balance the need to recover debts owed to the government with the need to identify and support people affected financially by the pandemic.”
“The Covid crisis has presented new challenges and the ECA will help us to drive up standards, drive out bad practice and drive forward the evolution of modern enforcement.”
Paula Stringer, Chief Executive of Christians Against Poverty said “Many of our clients tell us how frightening a visit from an enforcement agent, also known as a bailiff, can be, but this is made so much worse when an enforcement agent breaks the rules, is aggressive and confrontational and does not take someone’s vulnerability into account.”
“The creation of the ECA is a major breakthrough for anyone facing enforcement action. We believe this independent regulator has the potential to shape the future of the enforcement industry – a future where bailiffs will always strive to show care, compassion and understanding when collecting debts from people in vulnerable circumstances. The challenge now is to turn this framework into action, and make sure the ECA has the authority it needs to raise standards across the sector.”
Peter Tutton, Head of Policy, Research and Public Affairs at StepChange Debt Charity, said “In the absence of statutory regulation, this pragmatic collaboration between the debt advice sector and the enforcement sector to establish a regulator with meaningful powers should help to address the poor practice that has previously characterised too many people’s experience with bailiffs.”
“With both the advice and enforcement sectors agreeing that the new Enforcement Conduct Authority would benefit from limited Government underpinning to help it succeed, we look forward to working further with the Ministry of Justice on this important next step on the path to raising standards and reducing harm.”
Alistair Chisolm, Head of Advice Sector Policy and Partnerships from PayPlan, said “Most people don’t understand what rights they’ve got when a bailiff arrives on their doorstep. Bailiffs have strong powers, but bailiff firms are exempt from independent regulation, and are scrutinised less than other debt collectors and lenders. This needs to change.”
“The proposed ECA falls short of the statutory regulation that we believe is the best solution, but this new body is a step forward. We welcome the chance to collaborate and develop better protections for people dealing with debt and enforcement.”
“It’s not just the enforcement sector that needs to change. The Government is reviewing the way public sector debts are collected, and we look forward to action in this area. Some public sector debt collection is still too aggressive – for example court action should not be allowed after just one missed payment Council Tax payment and one reminder.”