As the public sector continues to face widespread criticism over the treatment of debtors, Credit Strategy queries if and what the catalyst will be for local councils to adopt the same culture and conduct in collections as the private sector.
The entire question around councils’ approach to debt recovery and their propensity to use enforcement agents was thrust into the spotlight recently by the tragic case of a debtor who took his own life.
Jerome Rogers, a 20-year-old motorcycle courier from Croydon, committed suicide in March last year. He had been issued with two road-related penalty charge notices (PCNs) from Camden Council, one for being in a bus lane at a restricted time and another for a banned right turn.
While reports of the case focussed only on the enforcement visits to recover the fines, Rogers was generally under severe financial pressure with other debts.
The first PCN was passed to Newlyn in September 2015. Two visits were made to Rogers in October and November 2015 and letters left when he wasn’t in. A notice of enforcement was subsequently sent to him, to which Newlyn had no response. Another letter was sent which also had no response.
When an enforcement agent working for Newlyn visited Rogers in January 2016, Rogers’ family helped by paying the £507 owed – an amount that included statutory fees. Rogers’ motorcycle was clamped at this visit but released after the payment was made. At that visit, Rogers agreed to pay the second PCN in instalments of £128 a week. However, while Newlyn sent texts to Rogers as a reminder to make the payments, none were made.
When the enforcement agent made a second visit to Rogers in March 2016, his bike was clamped again while allowing time for payment to be made. On the same day, Rogers took his own life.
At an inquest into Rogers’ death, assistant coroner for south London Jacqueline Devonish, after hearing evidence and watching bodycam footage, said the enforcement agent had acted “reasonably” towards Jerome and was “informative”, adding: “He did what he was required to do under the law.”
Indicating the wider financial difficulty Rogers was in, Devonish stated in a record of the inquest that there were “several stressors” in his life.
Newlyn issued just a one-line statement on the case, stating: “Our deepest sympathy goes to the family in these tragic circumstances.”
A spokesperson for Camden Council said: “This is a tragic case, and our thoughts are with Jerome’s family and friends.”
While this was a tragic case with specific circumstances, it comes after a recent history of calls for councils to change the way they approach council tax debt recovery. Local authorities move to enforcement too quickly, is the most common complaint.
Peter Tutton, head of policy at StepChange Debt Charity, said: “For some councils it seems that the move to enforcement is seen as the first, not last, resort.”
Charities have been calling for reforms in enforcement generally, which might in turn alleviate the impact of falling behind on council tax arrears for many households. Earlier this year, a number of charities published the Taking Control report, calling for an independent enforcement regulator.
Those same charities have also published figures indicating the scale of local government-related problems their clients face. StepChange Debt Charity, for example, helped 67,000 people who had council tax arrears issues in 2016.
Oversight in the public sector can hardly be compared with the intrusive levels of governance and scrutiny in the private sector, but the body that holds councils to account for individual complaints is the Local Government Ombudsman (LGO).
The LGO independently investigates complaints about councils, when the issue has not been resolved or responded to by the specific organisation within 12 weeks. At the time of going to press (mid-May), there had been 49 complaints published on the LGO website in regards to council tax complaints that had either been upheld or not, or closed.
Aside from councils, the accountability structure for enforcement agents is essentially legislation enforced by the Ministry of Justice, although there is also a well-established code of practice published by the Civil Enforcement Association for Certificated Bailiffs (CIVEA).
With such a focus on fair treatment in the private sector in the past few years, it has come to a point where questions revolve around the public sector and if it will ever adopt the same kind of culture and conduct in collections that exists in the private sector.
When Credit Strategy asked Camden Council about its approach to treating debtors fairly, it said: “In our correspondence with debtors, we urge them to contact us if they are struggling to pay.
“Payment plans can be used, and are used, to assist people in paying their debts. If a debtor contacts us stating they are facing financial hardship, we would immediately suspend action on the warrant in order to investigate the case.”
Companies supplying services to councils have also observed changes where authorities are thinking about the way they treat vulnerable customers.
James Hilton, head of public sector at Callcredit Information Group, said: “Local authorities are attempting to better identify those who can’t pay, so that recovery action can be appropriately tailored and targeted support plans can be delivered to the most financially vulnerable debtors.”
Callcredit has noticed that some local authorities are consciously trying to create a view of all debts owed to the authority by each individual so they are able to identify individuals in genuine financial hardship.
He said councils are trying to avoid using DCAs for recovery of debts from those experiencing financial hardship, and instead are investing in understanding their needs and providing debt and budgeting support.
This echoes the views of trade bodies that have witnessed a trend of more councils bringing debt recovery in-house. Barrie Minney, chairman of the Local Authority Civil Enforcement Forum (LACEF), told Credit Strategy that more councils are now taking back enforcement and building their own internal teams.
Catalyst for change
Tutton believes that adopting a new approach will not cost government or councils anything, and that they may in fact see greater performance in debt collection.
He said there is emerging evidence that councils can adopt a more advice-based approach to debt collections and see improvements in collection rates.
Tutton added: “Government is in the best position to drive change by setting standards, oversight and ensuring financially vulnerable consumers get the help and protection they need.”
Rachel Gregory, external affairs analyst at CAP, said a catalyst for change could be the wider introduction of a “breathing space” scheme across all councils. A number of debt charities have called on the government to give individual debtors a breathing space, in which interest charges and enforcement action are stopped for those seeking regulated debt advice.
Other, smaller elements have been tabled to help tackle the bigger problem. Part of the Taking Control report recommended that councils adopt the Standard Financial Statement (SFS) into collection practices, which could be a part of the solution.
Privately, those in the advice sector say it is unlikely there will be any substantive change to the way the public sector collects debts in the near future, nor will it take on board any of the fairer approaches used by the private sector.
The common thread through opinions of those in this sector is that the only catalyst for change would be if the public sector became directly subject to a regulatory regime equivalent to the FCA. The problem is, many can’t ever see that happening.