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Government commits to tackling public sector collections

The Cabinet Office has announced cross-government efforts to improving debt collection practices at both central and local levels.

In a statement the government said, through the creation of the Fairness Group in 2016, it has developed a set of debt collection principles in conjunction with the debt advice sector. The principles are aligned to Financial Conduct Authority (FCA) guidelines on treating customers fairly.

 

The Cabinet Office has also developed a cross-government debt management strategy and the debt standard to ensure the guidelines are embedded in debt collection processes at all levels, it said.

 

The aim is to continually improve how government interacts with people in debt, particularly those in vulnerable circumstances and/or experiencing financial hardship by:

  • Understanding the impact that debt collection practices can have and how to improve them;
  • Implementing a joint programme of work to further examine practices in central and local government debt management which support vulnerable people, and make evidence-based recommendations for change;
  • Applying fairness principles to government debt management, in line with sector best practice;
  • Balancing the statutory and societal obligations of government to collect debts and ongoing liabilities, and prevent fraudulent activity, with the need to ensure fairness.

Chief executive of the Money Advice Trust Joanna Elson said the government’s commitment to improve its collections practices “is very welcome”.

 

She said: “Public sector debt collection practices should set the gold standard, but it has been widely recognised that there is a significant amount of work to do to realise this ambition.

 

“The public statement published by the Fairness Group today rightly recognises the need to balance the interests of the taxpayer with ensuring that debts are collected fairly from people in financial difficulty – and particularly those who are in vulnerable circumstances.

 

“The next step will be to translate this commitment into real action for the people our debt advisers help day in, day out.”

 

The Fairness Group is made up of Citizens Advice, StepChange Debt Charity, Money Advice Trust, the Money and Pensions Service, the Credit Services Association, PayPlan and Indesser.

 

Gillian Guy, chief executive of Citizens Advice, said: “Unfair and aggressive debt collection has a serious impact on those in financial difficulty. We’re pleased government is looking to improve these practices and collaborate more with the money advice sector.

 

“Through the Fairness Group, we will continue to share our evidence on this problem and work to ensure the collection practices used by government are as fair as possible.

 

"This group, and the MHCLG led review of council tax collection, are good starting points for the government to take urgent action to improve debt collection practices. It must use the review to fundamentally reform the outdated regulations governing how local authorities collect debts.

 

“These changes, such as making sure people aren’t forced to meet the cost of their entire annual bill after a single missed payment, are necessary to ensure councils have the flexibility to help people get their finances back on track.”

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