#malg15 workshop b debt collection rules - slideset
TRANSCRIPT
camden.gov.uk
Debt collection by local authorities and other creditors – are they playing by the same rules?”
Lesley Pigott Assistant Director of Finance (Revenues) London Borough of Camden
camden.gov.uk
Welcome to Camden
camden.gov.uk
Wealthy people living in the most
sought a2er neighbourhoods
7.1%
Young, well-‐educated city
dwellers 59.0%
People renCng flats in high density social
housing 28.5%
camden.gov.uk
Playing by the same rules?
camden.gov.uk
Ø residents Ø businesses Ø workers Ø tourists Ø other councils and government
bodies
local authority debtors:
camden.gov.uk
Ø taxes Ø rents Ø fees and charges Ø fines
local authority debt:
camden.gov.uk
Ø business rates £518m Ø housing rents £162m Ø council tax £107m Ø parking £ 37m Ø leaseholders £ 17m
top 5 debts
camden.gov.uk
Ø local authorities are not working to one piece of legislation to collect debts.
Ø They are publically accountable and challenged in law if they get it wrong
legislation
camden.gov.uk
funding will continue to fall
camden.gov.uk
the financial outlook remains challenging
camden.gov.uk
Camden’s approach Ø single view of debt Ø help people to prioritise and pay -
agreed instalments for total debt Ø Camden Advice Partnership (CAP)
funding for advocacy, debt & money advice
camden.gov.uk
not just “debtors”
Ø our tenants, residents and partners Ø the relationship is about much
more than debt collection
camden.gov.uk
speak to the local authority
• we can’t help if we don’t know • people need (to be encouraged) to make contact
The CSA and The Debt Collec1on Industry
The Credit Services Associa1on and The Debt Collec1on Industry
Peter Wallwork CEO
Credit Services Associa1on
The CSA and The Debt Collec1on Industry
Credit Services Associa1on – An Overview
• The Credit Services Associa1on (CSA) is the only UK Trade Associa1on servicing the Debt Industry – includes debt collec1on, debt purchase, tracing and other allied services (i.e. reconnec1on visits)
• The CSA represents 90% of debt collec1on and debt purchase ac1vity within the industry
• Circa 400 members: – £67bn of debt held for collec1on = 54 million accounts – £53bn owned by debt purchasers = 38.5 million accounts
• Industry Code of Prac1ce
• Works closely with the Industry Regulators, Government and other Trade Bodies
The CSA and The Debt Collec1on Industry
Debt Collec1on – An Overview
• Customer goes into arrears with their payments. Creditors will try a number of op1ons: 1. In-‐house collec1on strategies 2. Outsource to debt collec1on agencies
i. Doorstep/Field Collec1ons ii. Legal ac1on
3. Outsource to legal 4. Sold to a debt purchase company
The CSA and The Debt Collec1on Industry
In-‐house Collec1ons – Early Arrears
• The Creditor will a_empt to engage with the customer via telephone and le_er
• This is usually carried out under the Creditors name, but can be carried out internally under a different trading style
• If successful, a repayment plan is made with the customer
• If unsuccessful, the account will be outsourced
The CSA and The Debt Collec1on Industry
Outsourced Debt Collec1on
• Where a Creditor fails to reach an agreement with their customer, they will outsource to a specialist debt collec1on agency (DCA) for a set period of 1me (usually 90 days)
• The DCA will make contact by telephone and le_er (or electronically or in the field), and a_empt to collect the outstanding amount usually by repayment arrangement
• The arrangement is with the DCA who will remit to the Creditor
• Accounts can be “placed” a number of 1mes if collec1on efforts fail
The CSA and The Debt Collec1on Industry
Outsourced Debt Collec1on – Trace and Collect
• If no contact is made with the Customer, they may be a “gone-‐away”
• Gone-‐away is where the Customer has moved addresses and not informed their Creditors
• Tracing is carried out to locate a new address for the Customer
• Tracing is a supplementary service to debt collec1on
The CSA and The Debt Collec1on Industry
Legal Ac1on
• If a Customer fails to keep to the repayment arrangement, and other le_er and telephone collec1on strategies have been exhausted, the Creditor may wish to take legal ac1on
• Creditors may seek to obtain a County Court Judgment against the Customer
• There are a number of enforcement op1ons if the Customer does not repay through a County Court Judgment
• Legal ac1on is generally only taken as a last resort
The CSA and The Debt Collec1on Industry
Debt Purchase
• Some Creditors will “sell” accounts to debt purchase companies
• Accounts are bundled into porfolios and sold in large numbers, for less than face value
• The debt purchaser then becomes the Creditor and takes on the rights and du1es under the Credit Agreement
• Debt purchasers will either collect in-‐house or outsource to third party DCAs
The CSA and The Debt Collec1on Industry
CSA Code of Prac1ce
Includes “Common Principles” and Key Requirements: • Dealing with Financial Difficul1es • Dealing with Complaints and Disputes • Data Protec1on and Confiden1ality • Monitoring Compliance • Sector Specific Principles:
– Tracing – Communica1on in collec1ons
• Telephone communica1ons • Wri_en communica1ons
– Doorstep Collec1on and Recovery – Debt Sale and Purchase – Legal Recovery/Li1ga1on – Overseas Collec1on and Recovery – Commercial Collec1ons
The CSA and The Debt Collec1on Industry
Con1nuous Improvement & High Standards
• Review of the CSA Code of Prac1ce to include key requirements from FCA Regime
• Common Misunderstandings documents or “Myth Busters” to provide clarifica1on both for Members and Customers
• Tracing Code of Conduct and Principles of Trace • Collector Accredita1on Ini1a1ve, Level 2, Level 3 and Level Accredited Diploma’s
The CSA and The Debt Collec1on Industry
Common Complaints
• Disputed debt – Generally disputes over balance – Adequate evidence of debt – “It’s not me”
• Mis-‐trace – Out of date data
• Customer Service – Harassment – Operator amtude
MALG Conference 2015 “All’s fair in love and war but what about Debt?” Workshop B: Debt Collection by local authorities and other creditors – are they playing by the same rules?
Alistair Chisholm
● Facilitator: Alistair Chisholm, Creditor Liaison Policy Officer, Citizens Advice
● Peter Wallwork, Chief Executive Officer, Credit Services Association
● Lesley Pigott, Assistant Director of Finance (Revenues), Camden Council
● Scribe: Darryl Matthews, Group Head of External Relations, Harrington Brooks and representing MALG’s Midlands Discussion Forum
Debt Collection by local authorities and other creditors – are they playing by the same rules?
Citizens Advice debt advice trends 2011/12 -14/15
0
50000
100000
150000
200000
250000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Council tax debt issues presented to Citizens Advice 2005/6-2014/5
Creditors’ collection, enforcement and best practice league table – from a free debt advice sector survey of adviser opinions
Helpful, professional communications: Advisers can get through on the phone to someone on who can help Letters from advisers are replied to promptly (creditor) is professional, polite and respectful to customers in financial difficulty Allows the person in difficulty the time to seek advice and to make affordable repayments: (creditor) agrees to set payments that your clients can afford to make (creditor) grants breathing space / extra time for clients who need it (to take advice) Offers appropriate support in difficult situations (creditor) is cooperative when there is a challenge to a debt (creditor) Is effective at supporting customers in vulnerable situations
Adviser’s opinions – interim results…
• Council tax collections – 69% score, second out of eleven
• Private debt collection agencies – 63% score, fourth out of eleven
The highest scoring creditor types scored 78% and the lowest 34%. 4 scored below 50%.
Survey answers
Council tax collections departments and DCAs scored highly on advisers being able to get through to someone on the phone who can help Both scored least well on being effective at supporting customers in vulnerable situations
Adviser comments on liaison with local authorities council tax collection departments Strategic – “We believe that we have an extremely good working relationship with [the] District Council and they have an extremely pro-active approach to trying to help people with their council tax debts which is in both the clients and their favour.” Operational – “We have quite a good working relationship with our local authority mainly due to our debt caseworkers and council staff being there for a substantial amount of time. New comers to the council are often more difficult as it takes time to build up relationships” Underdeveloped – “[Our council] refuse to take information over the phone relating to a client’s situation…. The requests are only taken seriously when put in the form of a complaint.”
Discussion Questions
1. What are the common principles that could inform how we work?
2. Would one regulator for all consumer debt collection help?
3. Local authorities, CSA members, advisers – are there lessons that we can learn from each other?
Alistair Chisholm Creditor Liaison Policy Officer Citizens Advice Telephone: 03000 231116 | Mobile: 7726901447