Charity flags concern over "unfair" public sector debt collectors

Written by Suzannah Brecknell on 19 July 2016 in News

Charity calls for good practice standards, as survey highlights concerns about unfair treatment by local authorities and Department for Work and Pensions

A third of debtors contacted by the Department for Work and Pensions believe they were treated unfairly, according to a survey released today by debt charity StepChange.

The survey covered 1,794 of the charity’s clients. It showed that 50% of debtors contacted by bailiffs believe they were treated unfairly, compared to 42% of those contacted by local authorities and 36% of those contacted by the Department for Work and Pensions.

Of clients who had been contacted by payday and short term lenders, 28% said they had been treated unfairly. The organisations perceived to be least unfair were credit card companies – just 20% of clients said they had been treated unfairly, and high street banks – 21%.

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The report notes that there is “a degree of correlation between robust sector regulation, and lower scores for unfair treatment”.

The organisations perceived to treat their debtors most fairly were fee-paying debt management companies, which were perceived as fair by 52% of their clients.

In contrast, just over a third of those contacted by DWP said they had been treated fairly – 37% – compared to just 19% of those contacted by bailiffs, and 32% of those contacted by local authorities.

The survey also found that 51% of respondents who were contacted by bailiffs were being chased for council tax arrears, while 16% were being chased for parking fines which “suggests an important conduct issue among councils and their enforcement agents,” said the report.

Of the respondents who were contacted by HM Revenue & Customs, 28% said they were unfairly treated, while 41% said they were fairly treated.

A DWP spokesman said: “It is right that we protect taxpayers’ money and recover overpayments caused by fraud or claimant error. However we always take people’s circumstances into account when we ask them to pay back money they owe to us, and can arrange for the debt to be paid back over a period of time to avoid causing hardship.”

Mike O’Connor, chief executive of StepChange Debt Charity, said: “Ensuring that people in financial difficulty get the right support at the right time can make the difference between someone getting back on their feet or them being driven into deeper hardship.”

He noted that good practice exists it all sectors, but “there is clearly some way to go before we have a fair and consistent approach to the treatment of people in debt and the Ministry of Justice, local and central government and creditors all have vital roles to play".

The charity is calling on the MoJ to re-consider its policy on regulating bailiffs, saying that although reforms introduced in 2014 represent a “modest step forward, the incidence of unfair conduct issues experienced by our clients remains high”.

Almost 90% of survey respondents who had been visited by bailiffs in the last two years were identified as having vulnerability beyond their  financial difficulties, compared to 75% of all clients surveyed. And a large majority – 86% – of those visited by bailiffs overwhelmingly said that experience had increased their level of stress.

The charity is also calling for the introduction of a statutory "breathing space" scheme which would give people who seek advice for debt problems a six- to twelve-month freeze on interest, charges and enforcement action.

About the author

Suzannah Brecknell is CSW's senior reporter. She tweets as @SuzannahCSW

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