#malg15 workshop b debt collection rules - slideset

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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

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Page 1: #MALG15 Workshop B   Debt Collection Rules - slideset

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

Page 2: #MALG15 Workshop B   Debt Collection Rules - slideset

camden.gov.uk

Welcome to Camden

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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%  

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camden.gov.uk

Playing by the same rules?

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camden.gov.uk

Ø  residents Ø  businesses Ø  workers Ø  tourists Ø  other councils and government

bodies

local authority debtors:

Page 6: #MALG15 Workshop B   Debt Collection Rules - slideset

camden.gov.uk

Ø  taxes Ø  rents Ø  fees and charges Ø  fines

local authority debt:

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camden.gov.uk

Ø business rates £518m Ø housing rents £162m Ø council tax £107m Ø parking £ 37m Ø  leaseholders £ 17m

top 5 debts

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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

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camden.gov.uk

funding will continue to fall

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camden.gov.uk

the financial outlook remains challenging

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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

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camden.gov.uk

not just “debtors”

Ø our tenants, residents and partners Ø  the relationship is about much

more than debt collection

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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

Page 14: #MALG15 Workshop B   Debt Collection Rules - slideset

The  CSA  and  The  Debt  Collec1on  Industry  

The  Credit  Services  Associa1on  and  The  Debt  Collec1on  Industry  

Peter  Wallwork  CEO  

Credit  Services  Associa1on  

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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  

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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  

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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  

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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  

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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  

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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  

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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    

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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  

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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    

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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  

 

Page 25: #MALG15 Workshop B   Debt Collection Rules - slideset

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

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●  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?

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Citizens Advice debt advice trends 2011/12 -14/15

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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

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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

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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%.

Page 31: #MALG15 Workshop B   Debt Collection Rules - slideset

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

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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.”

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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?

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Alistair Chisholm Creditor Liaison Policy Officer Citizens Advice Telephone: 03000 231116 | Mobile: 7726901447