New, ethical debt collections have launched in the borough – with a brief to save public funds by relying less on bailiffs, and helping residents avoid debt in the first place.
In a revolutionary new joint venture, Hammersmith & Fulham Council and 1st Credit are setting out to improve the treatment of those who owe debts to the council. We also want to dramatically reduce the number of cases that end up in court.
“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,” said 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.”
This new partnership changes the way public sector debts are handled, applying Financial Conduct Authority (FCA) standards to public debts, as well as private sector debts.
The scheme – called H&F Ethical Debt Collections – is committed to drastically reduce the use of bailiffs, avoiding increased hardship for residents and greater expense for the council.
The joint venture has already started taking over collections in the borough, beginning with former tenant arrears and housing benefit overpayments. Other types of debt will soon be phased in.
There will also be work to help residents avoid debt, with the council identifying individuals at risk of falling into trouble, and taking steps to assist.
“There is a huge gulf between best practice in the private sector and normal practice in the public sector, and we want to see Financial Conduct Authority standards applied to all,” added Cllr Schmid.
“The consequences of poor debt collection practices effect 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.”
Eddie Nott, UK Managing Director of 1st Credit, said: “It is time for public sector debt collection to change. We have developed analytical, ethical ways of working with individuals in debt to resolve their financial problems – protecting the vulnerable while maximising the money collected.
“With an organisation the size of H&F there is enormous scope to set up a system of ethical debt collection that increases efficiencies, raises funds for the council to reinvest in local services and protects its residents from the negative effects of debt.”
Helping our council tenants beat debt
This new venture continues a move, which started in October 2015, to help residents in the borough avoid getting into troubling debt situations with the council.
Since then, our Rental Income Team recruited three new staff members tasked with advising residents on managing their accounts with the council.
Since then, the team has dealt with 763 local residents to generate £798,000 in extra income for the council, while helping residents avoid the stress of falling into debt.