Jane Tully is Director of External Affairs at the Money Advice Trust. She is responsible for the Trust’s work to improve public policy and industry practice so that people can tackle their debts and manage their money with confidence, the promotion of the Trust’s own services and for championing the provision of free debt advice more widely. She facilitated a workshop on the advice sector’s recent Taking Control report at the MALG Members Meeting on 5th July, and below shares the notes from the group discussions on the day:
The Taking Control report, launched in March 2017 by AdviceUK, Christians Against Poverty, Citizens Advice, Money Advice Trust, StepChange Debt Charity, The Children’s Society and Z2K, makes seven recommendations:
- Independent regulation covering both individual bailiffs and bailiff firms, setting standards of practice, monitoring compliance and enforcing where necessary
- A single complaints mechanism that is free, clear, transparent and accessible
- A procedure to suspend bailiff action once begun, allowing people to apply to suspend warrants and offer affordable payments
- A restructuring of bailiff fees so as to incentivise good practice
- The use of a framework for agreeing affordable repayments like the Standard Financial Statement
- Better protections for vulnerable people including making sure there is a mechanism to refer cases back to creditors where vulnerability is presented
- And finally improvements to creditor practice, with creditors doing more to act responsibility and ensure enforcement is only ever a last resort. There are particular recommendations for local authorities here.
MALG meeting delegates were asked to consider recommendations in four groups (covering recommendations 1+2, 5, 6 and 7), and for each, address two key questions:
- What are the barriers to implementing this recommendation?
- How might these barriers be overcome?
Please note all comments are from the group discussion and not attributable to any one individual/organisation.
Notes from group discussion on recommendations 1 + 2 (independent regulation and complaints mechanism)
Key question – are we talking about a regulator or regulation?
Agreement that regulation needs to cover both individuals and firms.
Options for who regulates/provides complaints mechanism were discussed
- A “collections and enforcement” regulator (would this bring LAs in?)
- FCA + FOS option – has the benefit of already being established, many firms already FCA regulated for other parts of business. Resource issues?
- A ‘co-regulatory body’ e.g. broadcast advertising analogy
Alternatives to the recommendations were also considered
- An ombudsman only, as a stepping stone to regulation?
- “Voluntary authorisation” by an industry-led body?
Barrier 1 – how will independent regulator/regulation be funded?
- The existing fee structure does not account for regulatory costs
- Could regulation be self-funded in the long term? This would need pump-priming
- Research on costs needed
Barrier 2 – diversity of the debt types being collected
- Makes it difficult for one regulator to regulate all
Notes from group discussion on recommendation 5 (affordability)
What are the barriers?
- Creditors views on the time limits for repayment which can be very short and inflexible.
- Who decides what an “affordable” payment is?
- Should people be able to self-assess their budget or do they need to seek advice?
- Suspicion about how the SFS works by creditors, local authorities and enforcement agents.
- Perception that the SFS is a “get out of gaol free” card by creditors.
- The lack of communication between local authorities and the DWP which can cause breaks in payment.
- Issues relating to the level of engagement by individuals who do not contact the enforcement agent or seek advice.
- The need to persuade individuals to seek advice before faced with a doorstep visit.
- Difficulty of completing proper budget on the doorstep for both the individual and the enforcement agent.
- Does the pressure of the visit lead the individual to make unrealistic offers they cannot keep to?
How might these barriers be overcome?
- Creditor education on how the SFS works is vital to overcome suspicions.
- Comprehensive training across the board for creditors and enforcement agents on the SFS.
- Use one objective tool such as the SFS consistently across the board, which removes the likelihood of subjective opinion influencing the outcome.
- Improve the collection of information for the SFS and provide evidence to overcome delays.
- There should be breathing space built in to allow individuals to seek advice and make realistic offers.
- A comprehensive assessment of all debts should be carried out-but individuals may need advice to do this properly.
- The creditors and enforcement agencies should encourage completion of a budget before the debt goes to enforcement and to the doorstep.
- It is vital to interact at the compliance stage rather than the enforcement stage.
- Creditors should be required to send the SFS budget with the initial letter and enforcement agencies should be required to send the SFS budget at the compliance stage.
- The Taking Control of Goods: National Standards should set payment parameters for creditors across the board.
Notes from group discussion on recommendation 6 (vulnerability)
Barrier 1 – Mindset in local authorities that harsh tactics = success
- Need to use evidence from other sectors e.g. water industry
- Need to step away from same-financial-year collections
- Requires more external scrutiny
Barrier 2 – Enforcement seen as an ‘easy option’
- Counter argument needs to be made
Barrier 3 – Commissioning strategies of LAs and who they recruit
- Other models need exploring e.g. Hammersmith and Fulham
- Reasonable offers need to be accepted and needs to be part of contracts
Barrier 4 – Data exists elsewhere in LAs but isn’t accessed
- Banks have a ‘single customer view’ – why don’t LAs?
- Need to use banks example to illustrate the value
Barrier 5 – Nothing consistent in place to help those who have suffered action and are vulnerable
- CIVEA scheme with advice agencies is an example
- More joined up approach needed – company and person at the door, linkin up policy and practice
- Clear systems needed to escalate cases back to LAs
Barrier 6 – unclear/too many definitions – who is vulnerable?
- Need to adopt a common definition
Notes from group discussion on recommendation 7 (creditor practice)
This discussion mainly centred on local authority practice.
Some members expressed a view that this was the most important recommendation of the seven in the Taking Control report.
Barriers
- KPIs – especially for LAs
- No resident contact numbers – lack of data
- Low trust in local authorities
- Cultural barriers in LAs (“this is the way we have always done this”)
- Diversity of approaches – localism
How they might be overcome
- Demonstrating to creditors effectiveness of other approaches (Scottish lessons?)
- Equivalent of responsibility to Treat Customers Fairly
- Need to look at incentivisation – do LA reporting incentives need to be looked at?
- Rethink relationship between creditor and enforcement agents. Where is responsibility held?
We will now be using these insights to feed into our further policy work around bailiff reform.