The second of four MALG15 workshops, considering: “Debt Collection by local authorities and other creditors- are they playing by the same rules?"

1. camden.gov.uk
Debt collection by local authorities and
other creditors – are they playing by the
same rules?”
Lesley Pigott
Assistant Director of Finance (Revenues)
London Borough of Camden

2. camden.gov.uk
Welcome to Camden

3. camden.gov.uk
Wealthy
people
living
in
the
most
sought
a2er
neighbourhoods
7.1%
Young,
well-­‐
educated
city
dwellers
59.0%
People
renCng
flats
in
high
density
social
housing
28.5%

4. camden.gov.uk
Playing by the same rules?

5. camden.gov.uk
Ø residents
Ø businesses
Ø workers
Ø tourists
Ø other councils and government
bodies
local authority debtors:

6. camden.gov.uk
Ø taxes
Ø rents
Ø fees and charges
Ø fines
local authority debt:

7. camden.gov.uk
Ø business rates £518m
Ø housing rents £162m
Ø council tax £107m
Ø parking £ 37m
Ø leaseholders £ 17m
top 5 debts

8. camden.gov.uk
Ø local authorities are not working to
one piece of legislation to collect
debts.
Ø They are publically accountable
and challenged in law if they get it
wrong
legislation

9. camden.gov.uk
funding will continue to fall

10. camden.gov.uk
the financial outlook remains challenging

11. camden.gov.uk
Camden’s approach
Ø single view of debt
Ø help people to prioritise and pay -
agreed instalments for total debt
Ø Camden Advice Partnership (CAP)
funding for advocacy, debt &
money advice

12. camden.gov.uk
not just “debtors”
Ø our tenants, residents and partners
Ø the relationship is about much
more than debt collection

13. camden.gov.uk
speak to the local authority
• we can’t help if we don’t know
• people need (to be encouraged) to
make contact

14. The
CSA
and
The
Debt
Collec1on
Industry
The
Credit
Services
Associa1on
and
The
Debt
Collec1on
Industry
Peter
Wallwork
CEO
Credit
Services
Associa1on

15. The
CSA
and
The
Debt
Collec1on
Industry
Credit
Services
Associa1on
–
An
Overview
• The
Credit
Services
Associa1on
(CSA)
is
the
only
UK
Trade
Associa1on
servicing
the
Debt
Industry
–
includes
debt
collec1on,
debt
purchase,
tracing
and
other
allied
services
(i.e.
reconnec1on
visits)
• The
CSA
represents
90%
of
debt
collec1on
and
debt
purchase
ac1vity
within
the
industry
• Circa
400
members:
– £67bn
of
debt
held
for
collec1on
=
54
million
accounts
– £53bn
owned
by
debt
purchasers
=
38.5
million
accounts
• Industry
Code
of
Prac1ce
• Works
closely
with
the
Industry
Regulators,
Government
and
other
Trade
Bodies

16. The
CSA
and
The
Debt
Collec1on
Industry
Debt
Collec1on
–
An
Overview
• Customer
goes
into
arrears
with
their
payments.
Creditors
will
try
a
number
of
op1ons:
1. In-­‐house
collec1on
strategies
2. Outsource
to
debt
collec1on
agencies
i. Doorstep/Field
Collec1ons
ii. Legal
ac1on
3. Outsource
to
legal
4. Sold
to
a
debt
purchase
company

17. The
CSA
and
The
Debt
Collec1on
Industry
In-­‐house
Collec1ons
–
Early
Arrears
• The
Creditor
will
a_empt
to
engage
with
the
customer
via
telephone
and
le_er
• This
is
usually
carried
out
under
the
Creditors
name,
but
can
be
carried
out
internally
under
a
different
trading
style
• If
successful,
a
repayment
plan
is
made
with
the
customer
• If
unsuccessful,
the
account
will
be
outsourced

18. The
CSA
and
The
Debt
Collec1on
Industry
Outsourced
Debt
Collec1on
• Where
a
Creditor
fails
to
reach
an
agreement
with
their
customer,
they
will
outsource
to
a
specialist
debt
collec1on
agency
(DCA)
for
a
set
period
of
1me
(usually
90
days)
• The
DCA
will
make
contact
by
telephone
and
le_er
(or
electronically
or
in
the
field),
and
a_empt
to
collect
the
outstanding
amount
usually
by
repayment
arrangement
• The
arrangement
is
with
the
DCA
who
will
remit
to
the
Creditor
• Accounts
can
be
“placed”
a
number
of
1mes
if
collec1on
efforts
fail

19. The
CSA
and
The
Debt
Collec1on
Industry
Outsourced
Debt
Collec1on
–
Trace
and
Collect
• If
no
contact
is
made
with
the
Customer,
they
may
be
a
“gone-­‐away”
• Gone-­‐away
is
where
the
Customer
has
moved
addresses
and
not
informed
their
Creditors
• Tracing
is
carried
out
to
locate
a
new
address
for
the
Customer
• Tracing
is
a
supplementary
service
to
debt
collec1on

20. The
CSA
and
The
Debt
Collec1on
Industry
Legal
Ac1on
• If
a
Customer
fails
to
keep
to
the
repayment
arrangement,
and
other
le_er
and
telephone
collec1on
strategies
have
been
exhausted,
the
Creditor
may
wish
to
take
legal
ac1on
• Creditors
may
seek
to
obtain
a
County
Court
Judgment
against
the
Customer
• There
are
a
number
of
enforcement
op1ons
if
the
Customer
does
not
repay
through
a
County
Court
Judgment
• Legal
ac1on
is
generally
only
taken
as
a
last
resort

21. The
CSA
and
The
Debt
Collec1on
Industry
Debt
Purchase
• Some
Creditors
will
“sell”
accounts
to
debt
purchase
companies
• Accounts
are
bundled
into
porfolios
and
sold
in
large
numbers,
for
less
than
face
value
• The
debt
purchaser
then
becomes
the
Creditor
and
takes
on
the
rights
and
du1es
under
the
Credit
Agreement
• Debt
purchasers
will
either
collect
in-­‐house
or
outsource
to
third
party
DCAs

22. The
CSA
and
The
Debt
Collec1on
Industry
CSA
Code
of
Prac1ce
Includes
“Common
Principles”
and
Key
Requirements:
• Dealing
with
Financial
Difficul1es
• Dealing
with
Complaints
and
Disputes
• Data
Protec1on
and
Confiden1ality
• Monitoring
Compliance
• Sector
Specific
Principles:
– Tracing
– Communica1on
in
collec1ons
• Telephone
communica1ons
• Wri_en
communica1ons
– Doorstep
Collec1on
and
Recovery
– Debt
Sale
and
Purchase
– Legal
Recovery/Li1ga1on
– Overseas
Collec1on
and
Recovery
– Commercial
Collec1ons

23. The
CSA
and
The
Debt
Collec1on
Industry
Con1nuous
Improvement
&
High
Standards
• Review
of
the
CSA
Code
of
Prac1ce
to
include
key
requirements
from
FCA
Regime
• Common
Misunderstandings
documents
or
“Myth
Busters”
to
provide
clarifica1on
both
for
Members
and
Customers
• Tracing
Code
of
Conduct
and
Principles
of
Trace
• Collector
Accredita1on
Ini1a1ve,
Level
2,
Level
3
and
Level
Accredited
Diploma’s

24. The
CSA
and
The
Debt
Collec1on
Industry
Common
Complaints
• Disputed
debt
– Generally
disputes
over
balance
– Adequate
evidence
of
debt
– “It’s
not
me”
• Mis-­‐trace
– Out
of
date
data
• Customer
Service
– Harassment
– Operator
amtude

25. MALG Conference 2015
“All’s fair in love and war but what about Debt?”
Workshop B:
Debt Collection by local authorities
and other creditors – are they playing
by the same rules?
Alistair Chisholm

26. ● Facilitator: Alistair Chisholm, Creditor Liaison Policy Officer,
Citizens Advice
● Peter Wallwork, Chief Executive Officer, Credit Services
Association
● Lesley Pigott, Assistant Director of Finance (Revenues), Camden
Council
● Scribe: Darryl Matthews, Group Head of External Relations,
Harrington Brooks and representing MALG’s Midlands
Discussion Forum
Debt Collection by local authorities and other
creditors – are they playing by the same rules?

27. Citizens Advice debt advice trends 2011/12 -14/15

28. 0
50000
100000
150000
200000
250000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Council tax debt issues presented to Citizens Advice
2005/6-2014/5

29. Creditors’ collection, enforcement and best practice league table – from a free debt
advice sector survey of adviser opinions
Helpful, professional communications:
Advisers can get through on the phone to someone on who can help
Letters from advisers are replied to promptly
(creditor) is professional, polite and respectful to customers in financial difficulty
Allows the person in difficulty the time to seek advice and to make affordable repayments:
(creditor) agrees to set payments that your clients can afford to make
(creditor) grants breathing space / extra time for clients who need it (to take advice)
Offers appropriate support in difficult situations
(creditor) is cooperative when there is a challenge to a debt
(creditor) Is effective at supporting customers in vulnerable situations

30. Adviser’s opinions – interim results…
• Council tax collections
– 69% score, second out of eleven
• Private debt collection agencies
– 63% score, fourth out of eleven
The highest scoring creditor types scored 78% and the lowest 34%.
4 scored below 50%.

31. Survey answers
Council tax collections departments and DCAs scored
highly on advisers being able to get through to someone on
the phone who can help
Both scored least well on being effective at supporting
customers in vulnerable situations

32. Adviser comments on liaison with local
authorities council tax collection departments
Strategic –
“We believe that we have an extremely good working relationship with [the] District Council and they
have an extremely pro-active approach to trying to help people with their council tax debts which is in
both the clients and their favour.”
Operational –
“We have quite a good working relationship with our local authority mainly due to our debt
caseworkers and council staff being there for a substantial amount of time. New comers to the council
are often more difficult as it takes time to build up relationships”
Underdeveloped –
“[Our council] refuse to take information over the phone relating to a client’s situation…. The requests
are only taken seriously when put in the form of a complaint.”

33. Discussion Questions
1. What are the common principles that could inform how we work?
2. Would one regulator for all consumer debt collection help?
3. Local authorities, CSA members, advisers – are there lessons that we can
learn from each other?

34. Alistair Chisholm
Creditor Liaison Policy Officer
Citizens Advice
Telephone: 03000 231116 | Mobile: 7726901447