London council to launch ‘ethical debt collection’ for residents

Hammersmith and Fulham Council (H & F) have launched “ethical debt collections” service in a bid to reduce costs to residents.

The council are working with a private firm on the joint venture, setting out to both improve the way debtors are treated and save money on the cost of bailiffs.

The move is part of an effort to change the way public sector debts are handled, applying Financial Conduct Authority (FCA) standards in the same way as private debts.

“Heavy handed debt collection in the public sector is counter-productive. Court action, bailiffs and lawyers all cost money, and can create high levels of stress and anxiety in families that find themselves in debt,” commented Cllr Max Schmid, H&F cabinet member for finance.

“We are determined to offer an ethical approach to debt management that both helps residents at risk of falling into debt and saves money for taxpayers at a time of massive funding cuts from central government.”

From 1 April 2018, H & F will aim to ask only for what debtors can afford, based on expenditure assessments which will be agreed over a set period.

However, the council says the scheme “is not going to allow anyone who should be paying their taxes to avoid doing so”, with those who can afford to pay but refuse to do so being pursued through “more effective, and more ethical, legal means”.

The joint venture has already started taking over collections in the borough, beginning with former tenant arrears and housing benefit overpayments, while other types of debt will soon be phased in.

Cllr Schmid said there was a huge gulf in practices of debt collection between the private and public sector but that the council wanted to change that.

He added: “The consequences of poor debt collection practices put a strain on our council budgets as well as those across the public sector and can be devastating to the wellbeing of families affected.

“In addition, costs of temporary accommodation, increased demand on temporary housing, social services and education services, affects physical and mental healthcare – can all result from heavy-handed use of bailiffs, putting a strain on the public purse.”

Top image: PhotoLondonUK

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