Urgent reform needed for public sector debt collection
Less aggressive approach is more effective and humane
Public sector debt collection should not be lagging behind private sector best practice, H&F Ethical Collections said today.
The joint venture between global credit management firm Intrum and Hammersmith & Fulham Council was formed in 2017 to reduce the use of bailiffs and improve the treatment of people in debt.
In a unanimous report published last week, the Treasury Select Committee said local and central government debt collection is 'uncompromising' and called for reform. The report said debt collection practices of public authorities are 'worst in class'.
“Debts are often pursued over-zealously, uncompromisingly, and with routine recourse to bailiffs. This approach risks driving the most financially vulnerable people into further difficulty. The public sector should raise its standards to the level of industry best practice,” it added.
H&F is taking over collection of the council’s debts in a phased approach, adopting best practice from the private sector and Financial Conduct Authority standards. Other councils are expected to announce similar partnerships with H&F Ethical Collections in the coming weeks.
Eddie Nott, Intrum UK Managing Director said: “It is time for public sector debt collection to change. Residents currently experience a postcode lottery when it comes to the way their debts are pursued and they are treated.
Aggressively pursuing people for money they do not have and sending bailiffs to the doorstep causes severe distress. It also makes no financial sense for the local authority. Instead, organisations should be working with residents to improve their financial circumstances and agree affordable repayments over the longer-term.”
He added: “Our customers have told us horror stories of bailiffs being sent out to bereaved people for late payments of £20, adding hundreds to the bill. This is not acceptable and is unnecessary.”
“There is enormous scope for councils to set up systems of ethical debt collection that increase efficiencies, raise funds to reinvest in local services and protect its residents from the negative effects of debt. We welcome the Treasury Select Committee’s recognition that things need to change and look forward to working with councils to make that happen.”
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