Industry experts highlight the ongoing need for compassionate enforcement
COMPASSION comes from giving people boundaries, non-statutory communications work best, and Council Tax Benefit should be used more extensively. These are just some of the conclusions coming out of the Credit Today / Civil Enforcement Association (CIVEA) webinar on Compassionate Enforcement, part of the Keep Britain Solvent series, held November 30th, supported by CCS (Complete Communication Solutions).
Almost 300 representatives from enforcement firms, local authorities and central government registered to attend the event, which explored the doubt that remains as to if, or when, real hardship will kick in post lockdown. Attendees were told councils face an impossible job balancing resources, expectations and vulnerability and that the “Breathing Space” scheme has been a mixed bag at best. Private and public debt should be managed in the same way in the future.
The webinar, coincided with the launch of a select committee inquiry on council tax collection, which attendees were encouraged to feed into, and aimed to boost creative thinking into how public debt can be collected moving forward. The industry still must collect where ethical to do so, delegates were told, but pre-enforcement work must clarify genuine hardship cases from evaders. It was agreed that early measures, such as direct earning attachments, can work best. Trying to collect debt within the financial year may no longer be a realistic model or approach.
Co-chaired by Gerard Dugdill, Publishing Director of Credit Today and Russell Hamblin-Boone, Chief Executive Officer of CIVEA, Compassionate Enforcement featured a panel of experts, who spoke at length and answered questions that provided unique insight, thoughts and examples of best practices.
The session looked at vulnerability and decided:
- New “vulnerable” debtors are often not able to self-diagnose, so the industry can provide guidance
- Trust leads to communication leads to payment plans
- Vulnerability is difficult to identify, especially post-lockdown with large volumes of debt cases
- Toolkits and the use of credit reference data can work, but lots of local authorities are not yet set up to automate data in bulk
- Vulnerability is a transient state with people falling in and out of debt with volatile incomes
- Agents can place cases on hold while cases are reviewed
- Procurement should include more focus on vulnerability.
Russell Hamblin Boone, CEO at CIVEA, highlighted figures such as at 31 March 2021, the total amount of council tax still outstanding amounted to £4.4bn arrears to councils, alongside £847m of debt added last year and the £9bn worth of costs absorbed due to COVID-19 measures. He noted that The Institute for Fiscal Studies found that those with the lowest incomes have been hardest hit and almost one in ten additional households had fallen behind on their Council Tax payments. He called for input from councils into both the Cabinet Office call for evidence on public debt management, as well as the new select committee inquiry, and said the new Enforcement Conduct Authority (ECA) had an interesting portfolio of challenges ahead (see below).
On nudge theory and data, attendees heard:
- Insights panels can work but debt analysis needs to look at circumstances not numbers. Individual approaches work best, looking at customer’s individual behaviours
- Pilot exercises can be expensive, so best practice learnings must be shared widely
- Adopting the approaches used in retail could be useful in terms of look and feel
- Tailored letters and approaches can be far more effective than standard templates
- On data and modelling, creditors need to be aware of how quickly data can change. Enforcement agencies are constantly investing to look at the best use of data, but can we automate the removal of shame?
- There are limitations to data use, but use what you have.
On the economy and indebtedness, attendees heard:
- Corporate insolvency may appear a bigger threat than personal debt
- Adult social care debt collection, normally low, is increasing
- The “cliff edge” of personal finance debt has not yet happened
- Projected 200-300% rises in debt advice have also not been seen
- Housing-related support may be delaying the cliff edge event
- Councils, such as Southwark, are working with GPs to help target support on health-related conditions
- We are not yet at the tipping point. Look at bureau data to gain insights. Council Tax arrears could be the factor that pushes the economy over the edge
- It is unfair that postcode liabilities can be triggered when people live in certain areas.
Further points were:
- Compassion can be endemic. But removing the debt burden can be uplifting for customers, helping them to change behaviours early can work best
- Moving forward, Breathing Space and further statutory debt repayment schemes need “a whole lot of work.” Less complicated, more accessible to people seeking help and better training for debt advisers on its use
- Much more needs to be done, from within and without the industry, to create world-class solutions on managing such debt now
- More private sector enforcement competition can work, but there are clear distinct skill sets in debt collection and enforcement. Again, filtering the right people for enforcement is the key task
- On communication and technology, the capture of mobile phone data hasn’t been as clear cut as it could have been. The private sector has led the way in recognising this importance. Customers want choice in how they communicate and “no pressure” engagements.
- On joined-up government thinking, progress is hampered by having operation processes mean that customers must follow “five different sets of rules” according to the source of their debt. Although the current three major government creditors – HMRC, DWP and HMCTS, owing 95% of debt –may change post coronavirus. Capability needs to be “rolled out” in the future.
On the new Enforcement Conduct Authority (ECA), tasks include:
- Reviewing existing practices and standards
- Sharing best practice
- Communicating achievements better
- Analysing data and looking at trends to see how enforcement can react better and smarter
- Taking a role in creating policy
The next forum is expected to look at sharing local authority best practice.
Please see below for extended summaries from the event panellists:
The Cabinet Office was represented by Steve Coppard, Deputy Director of Government Debt Management Function, who reaffirmed his stance on taking people out of debt rather than taking debt out of people. He reiterated the need for enforcement and shared his view that compassion should be present at the front-end of this process, saying that he fully expects to see increased adoption of behavioural science techniques.
Don’t let debt get of hand
The proposed Enforcement Conduct Authority (ECA) could help maintain standards and analyse trends for public debt collection. Mr Coppard said that vulnerability is transient and variable, explaining that well-trained front-line enforcement agents remain essential to identifying people in need of support. He pointed out that in some circumstances it is more compassionate to set boundaries than let problem debt get further out of hand. He highlighted successful communication, made possible by compassionate mindsets, as a way to reach long-term positive outcomes for debtors, agents and local authorities.
Charlotte Acutt, Income Operations Manager at Southwark Council, discussed the local authority perspective, explaining how compassionate enforcement can be applied where persistent non-paying may itself be a sign of vulnerability. She proposed that more local authorities should adopt flexible approaches with enforcement firms and explained that this partnership leads to many vulnerable debtors being identified when an agent visits. She explained how the freeze on collection activity in 2020 meant people were less motivated to seek support.
The procurement of enforcement services was also discussed and it was widely agreed that support for vulnerable people should be a key feature of contracts.
Paul Bowden, Partner at Wilkin Chapman LLP (solicitors and insolvency practitioners), explained that despite working at a time when local government budgets are decimated and local people are facing continued financial constraints, it is important to ensure that you do not expect to detect vulnerability through an automated process. Compassionate qualities, such as understanding individual circumstances allow for appropriate solutions to be applied. He shared concerns about the continued impact of Council Tax Benefit withdrawal in 2013 and inconsistency with Council Tax Reduction Schemes, combined with councils being under pressure to collect with fewer resources. The key for him is about balance – having systems in place that protect the most vulnerable but that are robust and effective to collect from those with the means to pay. Paul concluded that compassion should be the starting point for engaging with anyone regardless of whether they are seeking to settle debts or are wilful non-payers.
Edd Moore, Head of Social Value and Customer Welfare for Equita, Ross & Roberts, and Stirling Park (the enforcement companies arm of multi-service provider, Capita) discussed how an enforcement firm’s approach to identifying vulnerable customers is key to ethical enforcement. Mr Moore explained how most firms look at each case on its own merits and appreciate that degrees of vulnerability have changed since the pandemic. He shared how firms now look deeper into cases, with many people not classing themselves as vulnerable until they are identified by enforcement agents.
Finally, he mentioned the importance of working alongside debt advice professionals and adopting technology to provide multiple channels of communication that encourage engagement and overcome barriers such as embarrassment or shame.
Jonathan Shaw, Creditor Relationship Manager at Christians Against Poverty, was encouraged to see these topics being discussed and shared his experience of people who struggle to engage and cannot provide proof of vulnerability. He highlighted the need to take on board issues surrounding mental health.
Paul Nield, Director at Complete Communication Solutions, said: “CCS were delighted to sponsor the compassionate enforcement webinar. As a business that focuses on digital engagement within Credit & Collections it is very interesting to understand the balance of identifying vulnerability and arrears collection for the public sector organisations. By being able to take part in these webinars it allows CCS to ensure we can tailor our technology to align with industry objectives.”
Evolution of ideas not revolution
Reflecting on the topics discussed during the webinar, Russell Hamblin-Boone, Chief Executive Officer of CIVEA said further: “It is evident we are not starting from a blank sheet of paper and the fantastic ideas and views shared during this event implies this an evolution rather than a revolution. Thought leadership exercises are a fantastic way to prompt wider policy debate for those tasked with helping central and local government recover the substantial arrears generated post-pandemic.”
Gerard Dugdill for Credit Today, agreed, saying: “Whilst it is apparent that recovering overdue debt from people facing additional financial pressure needs reimagining, it was very encouraging to hear the thoughts of diverse voices across the industry. Good approaches are being made quietly in defined areas but sharing this best practice and success in forums like this will help to achieve wider goals. We were thrilled to explore these key aspects of national credit policy and this is just the start of the debate around how to facilitate responsible debt management in future.”
NOTES TO EDITORS
CIVEA is the principal trade association representing civil enforcement agencies employing around 1800 certificated enforcement agents that operate in England and Wales. CIVEA represents 40 companies that make up over 95% of the entire enforcement industry.
CIVEA’s members work to enforce civil debt on behalf of local authorities and Her Majesty’s Courts and Tribunals Service (HMCTS) including council tax, business rates, parking fines, magistrates’ court fines, employment tribunal awards, child support payments, commercial rent arrears. This amounts to over £500 million (half a billion) of unpaid taxes and fines recovered each year at no cost to the public bodies themselves. Each year CIVEA members receive over 3.5 million warrants and court orders.
Credit Today is the global brand exploring key issues in commercial, consumer credit and city credit. Established in 1998, it has also run conference, shows and awards, from its UK base. It launched the Keep Britain Solvent (KBS) campaign spring 2021 to be a communication and policy conduit between end users of credit, the credit industry and government. KBS will help shape strategy on both commercial and consumer credit post lockdown, to minimize the impact on business and personal finances. Visit www.credittoday.co
Press Contact for CIVEA
Joe Cuffaro, WSA Communications