BREAKING THE INERTIA

18/06/2010

By Peter Wallwork

For some time now, the collections industry has been subjected to a steady stream of negative comment both from within the media and through online chat-rooms. There is no surprise there. No one likes to be in debt, and a collector is rarely going to be thought of as a debtor’s best friend. But there are a number of myths being allowed to circulate that are making a difficult job more difficult still. One of the most damaging – and erroneous – is that complaints are rising out of control.

Statistics from the Financial Ombudsman Service suggest there is little if any evidence of rising complaints. The figure of 600 complaints quoted recently, against a context of more than 20 million cases, would compare considerably more favourably than other, potentially less ‘sensitive’ industries such as telecommunications or water.

That is not to say that we do not take complaints seriously. Indeed it could be argued that even one complaint is one too many, and that zero complaints should be our target. What we are arguing for, however, is slightly less hysteria and rather more focus on why these complaints are arising in the first place, for the majority centre around the same issue: tracing.
Again, context is important. Last year, Members of the CSA were obliged to carry out more than [17 million] traces to find debtors who had ‘gone-away’. Mistakes occur when the innocent are caught up in the process, primarily as a result of faulty data. This problem could be eradicated virtually overnight, however, if collectors were allowed access to the full electoral roll – something they are currently denied. Indeed this is one of the key issues the industry faces today. Presently, it is only allowed to consult the edited rather than the full register for tracing purposes. Now there are moves afoot to deny collectors access to even the edited roll.

The Government, despite several representations by the CSA, has singularly failed to address this issue in all of the time it has been in power. Only recently has it finally decided to hold a public consultation. A cynic would view this consultation as delaying the inevitable. An optimist would see it as our chance to argue that we should not only be able to use the edited roll, but in fact we should be entitled to access the full register, something we are denied under current legislation.

This issue is of particular concern to our colleagues in the Debt Buyers and Sellers Group, who have an arguably even greater challenge with the Consumer Credit Act 2006. CCA06 requires them to send Notices (i.e. Statements of Arrears or Default Notices) to the last known address of the debtor, even when they know that the debtor has long-since ‘gone-away’ and – for the time being at least – cannot be found. The DBSG Members are the principal users of tracing, and so the issue of the electoral roll and the CCA06’s ‘statementing’ rules are inextricably linked. They understand the repercussions in terms of cost, negative media coverage, and the possibility of fraud. The Government has suggested that ‘abridged’ letters would go some of the way to solving the last of these three, but again they have ducked the real issue. Sending a letter to a known ‘gone-away’ – regardless of the level of detail it contains – has to be folly.

Years of inertia have done nothing to help the collections industry – an industry, it should be remembered (but is more convenient to forget) that makes a vital contribution returning billions of pounds each year to the economy. But perhaps more importantly, this paralysis has also failed the consumer. In the Government’s understandable drive to want to protect debtors, they have actually managed to achieve the opposite.

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