The Credit Services Association (CSA) has issued a detailed response to the government after calls from debt charities to halt all collection activities - and potentially write off billions of pounds of debt.
The CSA said that rather than pulling away from each other, the government, pressure groups and the debt advice sector should be working with the CSA and its members in determining a way forward.
CSA members act on behalf of nearly all of the major financial institutions, banks, credit card companies and the government. But its members also manage more than 750,000 commercial accounts, mostly on behalf of small businesses, collecting more than £400m every year.
The membership also has more than £67bn to collect at any one time and the firms employ more than 11,000 staff, a large majority of those are based in the north of England.
Following the debt advice charities calls, the CSA has lobbied for a collaborative approach in coming up with policies that deal with a specific and clearly defined problem, without causing additional issues that make matters worse.
“Now is the time for clear heads and clear thinking,” said Peter Wallwork, CSA chief executive.
He added: “We need to resist calls for wholesale changes which may look like the answer but fail to take into account the bigger picture and the wider impact on society and our economy. We need to help the greatest number we can but in such a way that doesn’t damage the credit/customer ecosystem irrevocably.
“Losing contact with customers, for example, may make matters worse not better, especially at a time when the debt advice sector is already swamped with calls and our members’ teams are in the perfect position to help navigate customers through these uncharted waters.”
Wallwork has already written to all of the c.250 CSA members to urge them to show additional forbearance where it is needed: “Many of our members had already taken proactive action to support their customers so it wasn’t a case of us telling them what to do but more them telling us what they’d already done.”
The CSA said its membership contributes around £4bn to the UK economy, while also providing about £35m in voluntary FairShare and levy contributions to the debt advice sector.
“It would be folly to put such funding at risk, simply because the consequences of an action had not been properly thought through, and this would directly impact front line free to consumer debt advice,” Wallwork added.
Wallwork explained that not everyone will be affected by the latest crisis to the same degree.
Some, he explained, will see their costs rise, their jobs under threat and their life changed beyond all recognition. For others, he added, there will be little or no impact at all, and a draconian ‘one size fits all’ approach – which could see an automatic three-month suspension of activities – would not make for a sensible policy.
“Ministers need to recognise that CSA members already help millions of customers to manage their debts and support the most vulnerable by funding and working with the principle debt charities. But we have seen that these charities are already overwhelmed, so ceasing customer contact at this critical time will do more harm than good.”