Debt charities want credit industries to share best practice

Advice UK, Citizens Advice, the Institute of Money Advisors and the Money Advice Trust yesterday released a report setting out five steps creditors should take to achieve best practice in debt collection. To coincide with the report, the aforementioned groups are also calling on the credit industry to discuss with them about how debt collection practice can be improved across the board.

The report, entitled ‘Do the Right Thing’, argues that helping people to overcome their debt problems and allowing them to make repayments that suit their circumstances has clear advantages for creditors, advice agencies and those actually in debt.

Using the experiences of advisors in the free-to-client debt advice sector along with interviews with creditors, ‘Do the Right Thing’ illustrates five steps towards best practice in the debt collection industry. Firstly, they believe that it is crucial that the industry itself sets the right organisational culture. Secondly, debt collection staff need to be motivated in the correct manner. The report also states that clear and encouraging communications need to be developed and that information and support needs to be provided at all times. Lastly, the industry must be willing and able to maintain and develop best practice.

Alex MacDermott, Credit Liason Policy Officer at Citizens Advice and author of the report, said:

“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.”