Councils must play their part in eradicating bad debt collection practices, debt charities say

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Changes to the law covering enforcement agents in England and Wales introduced in April 2014 are failing to protect people in financial difficulty from unfair treatment, according to Taking Control, a new report released by a coalition of debt advice and other charities.

According to the charities, local authorities should play a central role in making bad debt collection practices by enforcement agents a thing of the past, ensuring fair practice in the process.

The report adds that local authorities are the largest users of enforcement agents and together they passed on 2.1 million debts to them in 2014/15 – an increase of 16% on two years previously.

The report found evidence that enforcement agents are:

  • regularly using intimidating behaviour
  • failing to accept affordable payment offers
  • failing to take account of vulnerable clients

Citizens Advice helped people with 82,000 issues related to enforcement agent action – with 57,000 issues related to enforcement of council tax debt alone.

Commenting on the report, Citizens Advice Chief Executive, Gillian Guy, said: “Harsh tactics can cause severe distress and push people even further into debt. Last year, Citizens Advice helped people with over 80,000 problems – with the majority related to enforcement action on council tax debts. Local authorities have a key role to play in stamping out bad practices – by treating people in arrears fairly and ensuring agents are only ever used as a last resort.”

The charities – namely AdviceUK, Christians Against Poverty, Citizens Advice, Money Advice Trust, StepChange Debt Charity, The Children’s Society and Z2K – are calling on the Ministry of Justice to introduce an independent regulator covering all enforcement agents, a single complaints mechanism and a restructuring of fees to incentivise good practice, alongside other reforms.

 

An intelligent an educated approach

Responding to the report, Ian Biggadike from Agilisys Revenue Collection says intelligent revenue collection can alleviate many of the problems outlined in the report.

“There is of course a time and a place for the use of enforcement agents and they can be an effective resource to recover debts on behalf of a local authority,” he said. “And furthermore the service is free to authorities, but their use does incur additional charges to the customer, who may already be experiencing significant financial pressures. The key issue to address is  ‘are the correct debts being passed to enforcement agents in the first place?’

“At Agilisys we panel manage five enforcement agents ourselves as part of our intelligent revenue collection approach. However, our decision to allocate debt to enforcement agents is taken based on our knowledge of debtors, both through internal data and previous payment history provided by the local authority and through our own insight provided by our relationships with credit reference agencies.

“What’s more, we do not allocate debts to enforcement agencies based purely on their performance in terms of collection; we monitor their standards of behaviour closely as well. If we ever started to receive complaints from citizens about the conduct of the enforcement agents on our panel, we would cease to allocate any future work to them. I am pleased to say that we have never had to do this.”

Ian continues: “For example, as part of our in-year collection partnerships, we work with non-paying customers to understand why they are not paying. Could it be because they have experienced a recent change in their circumstances? We also aim to educate them in the concept of priority debts above lifestyle debts such as credit cards and mobile phones. But most importantly we aim to agree sustainable and affordable repayment arrangements that will not break after a short time.

“By working with customers and ensuring that they can sustain repayments, we can avoid the need to refer such cases on for enforcement, which has to be the ultimate aim for all local authorities. In some cases, Agilisys has managed to collect up to 45% of in-year debt referred to us by using this approach, and you can imagine how much additional fees that this has saved local citizens.”

Ian concludes by adding: “My position on the role that enforcement agents have to play very much remains. It’s the consecutive non-payers and avoiders that need to be referred to enforcement agents, not those that cannot afford to pay, but of course even then, avoiders need to be treated with respect and in a manner that we would expect to be treated ourselves.”

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