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Hammersmith and Fulham, Bristol councils pursuing ethical debt collection schemes

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The following news article is from Intrum:

 

H&F Ethical Debt Collections launches new public sector approach. Revolutionary public-private joint venture to cut use of bailiffs by public sector bodies

 

Hammersmith & Fulham Council and debt purchaser 1st Credit have today officially launched their joint venture, H&F Ethical Debt Collections, at the Local Government Association’s annual conference in Birmingham.

 

The partnership changes the way public sector debts are handled, ending the two-tier treatment of customers in debt by applying Financial Conduct Authority (FCA) standards to public as well as private sector debts. Those with public sector debts too often experience poor customer treatment and high levels of court action.

 

H&F Ethical Debt Collections is committed to drastically reducing the use of bailiffs in the public sector, the use of which often exacerbates hardship for individuals and places greater burden on the public purse.

 

The joint venture will now roll out its services to other local government organisations. It will be raising awareness at this week’s Local Government Association conference, which is due to attract more than 1,300 local government delegates.

 

1st Credit is an award-winning debt purchaser, known for taking a highly ethical approach to debt collection – in particular treating customers fairly. It has a +44 Net Promoter Score and consistently achieves top ratings from Investor in Customers.

 

H&F Ethical Debt Collections has already started taking over Hammersmith & Fulham Council’s collections, beginning with former tenant arrears and housing benefit overpayments. Other debt-types will follow on a phased basis, with council departments given the power to decide how and when to use the services, sharing their insights and expertise.

 

As well as debt recovery and commercial aims, the joint venture will help residents avoid debt by identifying individuals at risk of falling into financial difficulty and working with them to avoid that.

 

Cllr Max Schmid, Cabinet Member for Finance at Hammersmith & Fulham Council, said the new approach will be transformative.

“We are delighted to launch H&F Ethical Debt Collections at the Local Government Association’s annual conference in Birmingham this week. Local government has faced many severe cutbacks and councils are working hard to combat the effects of austerity. At Hammersmith & Fulham we are determined to offer an ethical approach to debt management that helps both residents and councils facing serious financial difficulties.

 

“Pursuing people aggressively is both damaging and counter-productive. The consequences of bad debt collection can be devastating to the wellbeing of residents. In addition, costs of temporary accommodation, increased demand on temporary housing, health, education and social services resulting from poor debt management put a strain on the public purse.

 

“There is a huge gulf between best practice in the private sector and normal practice in the public sector and we are determined that Hammersmith & Fulham becomes a shining example of good practice and can help other councils do the same.”

 

Eddie Nott, UK Managing Director of 1st Credit, added: “It is time for public sector debt collection to change. We have developed analytical, ethical ways of working with individuals in debt to resolve their financial problems – protecting the vulnerable while maximising the money collected.

 

“With an organisation the size of Hammersmith & Fulham there is enormous scope to set up a system of ethical debt collection that increases efficiencies, raises funds for the council to reinvest in local services and protects its residents from the negative effects of debt.

 

“We are now able to extend these services to all local government organisations and believe the time is right for transformation in this sector.”

 

https://www.intrum.co.uk/business-solutions/newsroom/all-news/h-f-ethical-debt-collections-launches-new-public-sector-approach/

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I was at a presentation a few months ago where this 'ethical' debt recovery proposal was presented and I have to be really honest by saving that the proposal raises serious concerns to me (and others that were present).

 

In the first instance, I understand that at present, the only debts being recovered under this joint venture are 'sundry debts' such as tenant arrears and housing benefit overpayments.

 

The Joint venture makes clear that the debt recovery company will receive a commission of money recovered. On this point, I have serious concerns.

 

It is a known fact that all local authorities are struggling financially and are looking at ways in which to cut their costs. By way of example, this week, my local own local authority have announced that almost 150 jobs would be going and that they would be smashing the highways budget by over £1 million. A major part of this saving would be to cut back on gritting of roads.......a disastrous and dangerous decision. They are also significantly slashing (by 50%) the funding that they provide to Citizens Advice.

 

In this respect, if my local authority were to consider using scares limited resources in order to pay commission to a debt recovery company to recover council tax and parking debts that bailiff company recover at NO CHARGE to the council, there would be FOR FREE, there would be significant complaints. With the greatest of respect, that is not an efficient use of my council tax payments.

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In this respect, if my local authority were to consider using scares limited resources in order to pay commission to a debt recovery company to recover council tax and parking debts that bailiff company recover at NO CHARGE to the council, there would be FOR FREE, there would be significant complaints. With the greatest of respect, that is not an efficient use of my council tax payments.

 

Apologies for the above spelling errors...keyboard engaged before brain....again.

 

It should have read as follows:

 

In this respect, if my local authority were to consider using scares limited resources in order to pay commission to a debt recovery company to recover council tax and parking debts that bailiff companies recover at NO COST to the council, there would be outrage. With the greatest of respect, this would not be an efficient use of my council tax payments.

 

PS: For the viewing public...edits can only be made to posts within 10 minutes of the post being made.

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I was at a presentation a few months ago where this 'ethical' debt recovery proposal was presented and I have to be really honest by saving that the proposal raises serious concerns to me (and others that were present).

 

In the first instance, I understand that at present, the only debts being recovered under this joint venture are 'sundry debts' such as tenant arrears and housing benefit overpayments.

 

The Joint venture makes clear that the debt recovery company will receive a commission of money recovered. On this point, I have serious concerns.

 

It is a known fact that all local authorities are struggling financially and are looking at ways in which to cut their costs. By way of example, this week, my local own local authority have announced that almost 150 jobs would be going and that they would be smashing the highways budget by over £1 million. A major part of this saving would be to cut back on gritting of roads.......a disastrous and dangerous decision. They are also significantly slashing (by 50%) the funding that they provide to Citizens Advice.

 

In this respect, if my local authority were to consider using scares limited resources in order to pay commission to a debt recovery company to recover council tax and parking debts that bailiff company recover at NO CHARGE to the council, there would be FOR FREE, there would be significant complaints. With the greatest of respect, that is not an efficient use of my council tax payments.

 

In our experience, we find that most people facing bailiffs for the collection of Council rent arrears, council tax debts, parking charge debts etc etc are already in some financial difficulty. Whilst there may be no charge to the council for using bailiffs there are certainly extra charges to those already in debt...HUGE extra charges. Logic says that if they are struggling to find monies for the initial charges then it is highly unlikely they will be able to afford the extra court fees and bailiff costs on top. It is self-defeating for a council to use bailiffs. It is far better to engage with a debtor at an earlier stage to help them come to some arrangements to make smaller manageable payments to catch up with any arrears. If there is a commission paid to the collection company this still means that the majority of the owed monies gets paid into the councils coffers to go towards much needed services. It would be great if the collection company worked for free...but they are not charities. The success of bailiff use (or rather the lack of success) is one reason why a number of national charities and those who work in this sector are lobbying LA's to stop using Bailiffs. It is THE most unsuccessful, least cost-effective way of collection and the most costly (and unmanageable) to the debtor. Better to work WITH the debtor...who may have very genuine reasons for struggling. "Can't pay" is different from "won't pay". The monies will come in, albeit eventually.

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Agree completely with kmacsouthend, Enforcement belongs back in the Middle Ages with King John and the Sheriff of Nottingham. Much better ways of recovery than increasing a debt to even more unmanageable levels. In the case of Council Tax it can increase into the thousands easily with bailiff fees on top of a couple of years in arrear.

 

 

Likewise Utility companies using HCEO.


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The bailiff: A 12th Century solution re-branded as Enforcement Agents for the 21st Century to seize and sell debtors goods as before Oh so Dickensian!

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In our experience, we find that most people facing bailiffs for the collection of Council rent arrears, council tax debts, parking charge debts etc etc are already in some financial difficulty. Whilst there may be no charge to the council for using bailiffs there are certainly extra charges to those already in debt...HUGE extra charges. Logic says that if they are struggling to find monies for the initial charges then it is highly unlikely they will be able to afford the extra court fees and bailiff costs on top.

 

It is self-defeating for a council to use bailiffs.

 

Thank you so much for such an interesting response.

 

In the first instance, I would like to make the point that I am very much in favour of the introduction in 2014 of the 'Compliance Stage'. If a debtor is unable to pay in full, on receipt of the Notice of Enforcement, he will be able to enter into a payment arrangement (again at NO COST to the council). Yes, there is a compliance fee of £75 added to the debt at this stage but if the payment arrangment does not default, a bailiff visit and the 'enforcement fee' of £235 avoided.

 

Turning now to your interesting point that from your experience, most people facing bailiffs for the collection of Council tax arrears, and parking charge are already in some financial difficulty. Unfortunately, this is not borne out by the evidence provided recently by the Ministry of Justice in their response to the 'One Year' review of bailiff enforcement. In their response, they confirmed that 38% of debts passed to enforcement agents during the period of 2015-16, are settled during the Compliance Stage'.

 

Another point that I would like to make is that if local authorities wanted to avoid their customers being subject to bailiff enforcement, they should make better use of Attachment of Earnings. If they were to use this method of collection, there would be NO cost either to the council or the debtor.

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A refinement with a more flexible scale on AOE would be good BA


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The bailiff: A 12th Century solution re-branded as Enforcement Agents for the 21st Century to seize and sell debtors goods as before Oh so Dickensian!

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It is far better to engage with a debtor at an earlier stage to help them come to some arrangements to make smaller manageable payments to catch up with any arrears. If there is a commission paid to the collection company this still means that the majority of the owed monies gets paid into the councils coffers to go towards much needed services.

 

In fact, I am really struggling to understand the legal position of using a debt collection company to collect council tax arrears once a Liability Order has been granted (or even before for that matter).

 

The relevant regulations would have initially come from the Deregulation and Contracting Out Act 1994 but with regards to council tax arrears, you would need to refer to the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996 as follows:

 

https://www.legislation.gov.uk/uksi/1996/1880/contents/made

 

A minor amendment was made in 2013 (below):

 

https://www.legislation.gov.uk/ukdsi/2013/9780111533161

 

Further amendments were made under the Tribunals, Courts & Enforcement Act 2007 but those changes merely referred back to enforcement having to abide by Schedule 12 (which of course only provides that debts must be enforced by certificated enforcement agents).

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A refinement with a more flexible scale on AOE would be good BA

 

Another interesting comment BN.

 

As we know, the deductions under an AOE are pretty steep but there is a valid reason why this is so and it stems down to the LOCAL AUTHORITIES/ The Treasury etc.

 

An AOE cannot be considered unless a Liability Order had been obtained. The bulk of LO's are granted around August/September onwards. The reason being, that the council tax bill is issued in April and there has to be two defaults before a summons could be issued. The delay between issuing of the summons and the Liability Order being granted can be a further two months. Local Authorities require payment of the council tax bill before the start of the new council tax year (April).

 

If a debtor is still paying arrears from a previous year (which would be the case if 'debt collecting agencies' were to be used) then that person is more likely than not to DEFAULT on the new council tax bill and another Liability Order will arise. The steep deductions under an AOE have been calculated so as to ensure that the arrears are paid off before the new council tax bill is issued.

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[color=" It is THE most unsuccessful, least cost-effective way of collection "

/COLOR]

 

Hi

I agree with much of what you say here, but could you show figures to support this please. Sadly the figures I have seen say the opposite, and hence the problem

 

It would be easy to convince bodies to discontinue using these archaic methods if it were so imo.

 

Perhaps the authorities are considering the human aspect of the equation, if so, it is about time.


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In fact, I am really struggling to understand the legal position of using a debt collection company to collect council tax arrears once a Liability Order has been granted (or even before for that matter).

 

 

 

HI BA

 

 

Personally, I don't think an order, warrant are needed in order for creditors to use debt collectors. Whether they do issue one or not is another matter.

 

Oder's of the court ,warrants etc are used to, "confer the power to use the regulations," these contain measures which without that authority would be illegal.

 

Debt collectors depend on no such powers. You can withdraw the implied right of access, etc. no rights at all.


DO NOT PAY UPFRONT FEES TO COLD CALLERS PROMISING TO WRITE OFF YOUR DEBTS

DO NOT PAY UPFRONT FEES FOR COSTLY TELEPHONE CONSULTATIONS WITH SO CALLED "EXPERTS" THEY INVARIABLY ARE NOTHING OF THE SORT

BEWARE OF QUICK FIX DEBT SOLUTIONS, IF IT LOOKS LIKE IT IS TO GOOD TO BE TRUE IT INVARIABLY IS

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A refinement with a more flexible scale on AOE would be good BA

 

Or at least a ban on putting 2 AOE's to run concurrently for separate liability orders. This practice is cynically cruel!

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Or at least a ban on putting 2 AOE's to run concurrently for separate liability orders. This practice is cynically cruel!

Yes it might take so much of the income and so prevent the debtor from either heating or eating if other utilities that WILL use County Court and bailiffs/HCEO like the Water Co are paid, the Gas & Electric companies might also get a Court Order to break in and fit prepay meters.


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The bailiff: A 12th Century solution re-branded as Enforcement Agents for the 21st Century to seize and sell debtors goods as before Oh so Dickensian!

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Other points are, who regulates the actions of the DC, its not via the TCEA, FCA?

If the DC action fails do they issue a default and go for a CCJ which is their usual MO, or do the authority issue an LO which puts it back with the bailiff?

 

Granting CCJ has been an issue on here in regard to CT, we must be careful that this is not also included in this new package.


DO NOT PAY UPFRONT FEES TO COLD CALLERS PROMISING TO WRITE OFF YOUR DEBTS

DO NOT PAY UPFRONT FEES FOR COSTLY TELEPHONE CONSULTATIONS WITH SO CALLED "EXPERTS" THEY INVARIABLY ARE NOTHING OF THE SORT

BEWARE OF QUICK FIX DEBT SOLUTIONS, IF IT LOOKS LIKE IT IS TO GOOD TO BE TRUE IT INVARIABLY IS

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