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Debt charities call on credit industry to share best practice in debt collection

24 February 2010

In a new report out today, AdviceUK, Citizens Advice, the Institute of Money Advisers and the Money Advice Trust set out five steps creditors should take to achieve best practice in debt collection and are calling on the industry to join them in a conversation about how debt collection practice can be improved across the board.

Do the right thing argues that helping people overcome their debt problems and paying back what they owe in a way that suits their circumstances has clear advantages for creditors, advice agencies and those in debt.

Based on the experiences of advisers from across the free-to-client debt advice sector as well as interviews with creditors, the report highlights the following five steps towards best practice in debt collection:

Speaking at an event to launch the report, Consumer Affairs Minister Kevin Brennan will say:

"I’m pleased to welcome this new report, it identifies a number of practical steps that can improve debt collection practices. Its absolutely vital that when people are struggling with debts they get the advice and support they need to address their difficulties in a responsible way."

Alex MacDermott, Creditor liaison policy officer at Citizens Advice and report author argues:

“Each year the CAB service helps nearly 600,000 people deal with debt related problems involving a range of different organisations, including commercial credit providers, local and national government agencies, fuel providers, water suppliers, telecommunication companies and many more. Bad debt collection practices can have dire consequences and often make things worse by pressurising the person in debt to pay more than they can afford. Homes, possessions and essential services can be lost where people are persuaded to make debt repayments before paying for everyday essentials. Relationships can break down, and the health and wellbeing of families and individuals can suffer.

“However we found from our discussions with both creditors and advisers that there are some clear steps creditors can take that will benefit everyone concerned, not just those in debt: advice agencies will be able to deal with cases quickly and efficiently and ultimately help more people; and creditors will receive sustainable repayments and waste less time and resources chasing money people simply do not have .We want to see creditors cooperate and do the right thing to help people overcome their debt problems and become valued customers once again.

“This report sets out how we believe creditors can achieve best practice in debt collection, but now we want to hear from creditors. If you would like to help us form a best practice working group, or you want to meet with us to share your collection practices please get in touch.”

Steve Johnson, Chief Executive, AdviceUK added:

“It is all too easy to focus on bad practice in debt collection. It is, however, equally important to identify and promote examples of good practice. This report demonstrates that improving debt collection practices brings clear advantages for creditors and debt collection agencies as well as debtors. I hope that it will stimulate debate and improvement for the benefit of everyone concerned in the process of debt collection.”

Caroline Siarkiewicz, Chief Executive,the Institute of Money Advisers said:

“The IMA welcomes this report and the dialogue between creditors and advisers that it has already generated and will continue. Do the right thing is an important report that seeks to identify and share good practice where it exists and to use this as a benchmark to improve debt collection practices across the piece, helping those people in debt to pay back what is owed in a way that is both fair and appropriate.”

Joanna Elson, Chief Executive, Money Advice Trust said:

“This clear and practical report demonstrates that advisers report some excellent practice by creditors and debt collectors and some less good practice. We are keen to continue working with creditors and advisers to ensure that the good practice is seen across the board, so that individuals in debt can pay back what they owe in a way that suits their circumstances.”

Notes to editors:

AdviceUK is the largest network of independent advice organisations in the UK, with more than 830 members. The total number of clients seen by AdviceUK agencies across all advice subjects is in the region of 2 million per year. 397 members of AdviceUK provide debt advice. Members range from large organisations to small, community-based organisations, many of whom operate in the 50 poorest local authority areas and serve ‘hard-to-reach’ communities. For more information see New windowwww.adviceuk.org.uk

The Citizens Advice service is a network of independent charities that helps people resolve their money, legal and other problems by providing information and advice and by influencing policymakers.

For more information in England and Wales www.citizensadvice.org.uk

For more information and 2008/9 service statistics see Introduction to the service

For 2008/9 service highlights see the Citizens Advice service impact report

For 2008/9 social policy campaigning highlights see the Citizens Advice social policy impact report

The Institute of Money Advisers is the professional body for money advisers. Our 1,500 members work throughout the Not for Profit sector helping people with debt problems in England and Wales. Our mission is to promote best practice, establish professional standards and assure quality in the money advice profession. For more information see New windowwww.i-m-a.org.uk

The Money Advice Trust (MAT) is a charity formed in 1991 to increase the quality and availability of money advice in the UK. We work with the UK’s leading money advice agencies, government and the private sector to increase the availability of money advice, improve its quality, and enhance the efficiency and effectiveness of its delivery. For more information see New windowwww.moneyadvicetrust.org