Debt collection agencies are frequently known for their high-pressure tactics and dogged pursuit of unpaid debts, often adding on extra charges for visits and paperwork.
A new report, titled, ‘Household finances: income, savings and debt’, from the Treasury Select Committee, has highlighted the frequent use of such agencies by local councils and government bodies and aims to tackle this problem.
Claiming these tactics to recoup unpaid debts are more aggressive than those used by many consumer firms such as banks, it calls for an urgent change to protect society’s most vulnerable people.
‘Over-zealous and uncompromising’
Highlighting that debts are often pursued ‘over-zealously and uncompromisingly,’, the committee claims the approach is driving vulnerable, struggling people into further difficulty, reports the BBC.
Containing evidence from Citizens Advice head of policy, Matt Upton, it compares the debt collection methods used by local councils with those of banks, noting the council’s comparatively more heavy-handed tactics:
“This is a point people find slightly difficult to grasp,” says Upton.
“When people first hear that government collection and local authority collection is effectively worst in class, versus consumer creditors, it is quite difficult to accept emotionally.
“Government must be better than some of these rapacious firms that we hear about…”
Spiralling council tax debts
The report highlights that many people currently in financial difficulty seeking help from the Financial Conduct Authority (FCA) and debt charity Step Change have problems with council tax payments.
Around a fifth of the FCA’s debt clients have reported such problems and Step Change told the committee that one-third of its clients have average council tax debts of around £1,000.
Speaking about the high-pressure methods used by some bailiffs to recoup their funds, Mr Upton told the BBC:
“We’ve seen cases where people have been marched to ATMs to make payments.”
Adding that people can get into a relatively small amount of debt, which can quickly spiral into a more unmanageable sum once debt collectors take over and add on their fees and charges.
The Guardian meanwhile reports that threats from bailiffs considered a factor in the suicide of courier Jerome Rogers, 20, who was pursued for two £65 parking fines that spiralled to a debt of £1,019.
The case prompted calls for urgent changes to the way the debt collection industry works.
Leading by example
The committee reports that as opposed to resorting to aggressive debt collection methods, the public sector should be leading by example and protecting people from unfair treatment.
This is a sentiment echoed by Citizens Advice, which highlights the rise of bailiff problems since 2014, which have more than doubled, with the service helping with 98,000 issues last year alone.
Gillian Guy, chief executive of Citizens Advice, said:
“MPs are right to acknowledge that government agencies and local authorities are worst in class for debt collection when they should be leading by example.
Reforms in 2014 were introduced to protect people from unfair practices, with a particular focus on how bailiffs collect debt.
It is clear these changes have failed. Citizens Advice has seen a more than 25% rise in bailiff problems since 2014 and helped 42,000 people with 98,000 issues last year.
We need an independent regulator to protect consumers from unfair practice.”
“A duty to collect taxpayer’s money “
An HM Treasury spokesperson said:
“Government and local authorities have a duty to collect taxpayer’s money that is owed to them.
“But we know that not everyone’s circumstances are the same, which is why people can get help to pay their debt in affordable instalments, reduce their payments, or take breaks entirely…”