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The Credit Services Association (CSA)
Blog: Credit Week: How we're working on behalf of the credit industry to influence policy for the mutual benefit of firms and customers
Peter Wallwork is CEO of the Credit Services Association.
As the UK trade association for the debt collection sector, we make it our business to engage with regulators, government, international bodies (such as FENCA), researchers, policy makers and other key stakeholders to be the voice of the industry on key issues.
This doesn’t mean ‘sticking up for our members whether they are right or not’; it means offering an industry perspective on key issues that affect customers and wider society so that we can all work together to raise standards for the mutual benefit of everyone.
If regulation or policy is going to work in practice, it has to be realistic, commercially viable and take into account all those involved and we have influenced policy on several things in recent years that have enabled this and had a real impact on the quality of customer outcomes.
Since it is Credit Week, we wanted to take the opportunity to highlight a few of these areas:
The point of the Government’s apprenticeship reforms including introduction of the Apprenticeship Levy is to make vocational training more employer-led and have a greater impact on UK productivity and social mobility.
In order to help ensure that this is the case, we’ve been involved in the development of apprenticeship standards designed specifically for the credit and collections industry and have achieved Main Provider status to deliver them. This will enable us to offer members and non-member levy paying companies high quality training, return on investment and full support to meet the obligations which come with being a levy paying employer.
Debt Pre-Action Protocol
Our former President and current CSA Board Director Leigh Berkley sat on the Ministry of Justice Civil Procedure Rule Committee subcommittee responsible for developing the Pre-Action Protocol for Debt Claims (often referred to as PAP). He fought hard for two years to lobby the industry’s view on the matter, and managed to gain some important concessions on sending out the original agreement at the Letter Before Action (LBA) stage, and the use of SFS. However, the protocol will still involve considerable additional cost and effort for those wishing to litigate, and many consumers will be confused by the paperwork they receive under PAP.
PAP for debt claims has now been approved by the Master of the Rolls and the implementation date is set for October 2017, which will be a tight deadline for many larger firms. We will be assisting our members by adding FAQs on PAP to our website for consumers.
Leigh and I as current and former Vice President of the Federation of National Collections Associations (FENCA), have also been instrumental in ensuring that the EU’s General Data Protection Regulation (GDPR) will work for debt collection at home as well as abroad. We remain centre stage in Europe (despite Brexit) and Leigh’s portfolio at FENCA is to implement two Codes of Conduct, one for GDPR and another for collections across Europe for all member Associations, both within the EU and beyond. The aim of these Codes will be to interpret GDPR for our sector, promote common standards for the European consumer and the industry, and will hopefully forestall the EU Commission bringing forward further regulation that could be detrimental to our members and, potentially, their customers.
Standard Financial Statement
We welcomed the launch of the new Standard Financial Statement to help create a clearer picture of an individual’s financial position and enable a fairer, faster resolution for resolving customer debts.
But we also gave a cautionary welcome to a new mechanism that allows customers to save a proportion of their monthly disposable income and effectively ‘ring-fence’ up to £20 per month to save for emergencies.
We warned against the additional costs to the industry in accommodating such a change, and proposed that customers should be required to open a designated savings account as evidence they are actually saving the surplus. Otherwise, despite the best intentions of the new statement, our industry and the economy could end up with the worst of both worlds: greater cost and longer periods before consumers get back to financial health.
SFS is now in place and we are encouraging our members to register as users.
Abuse of CCJs
In September 2016, the Daily Mail ran an article entitled ‘Lives ruined for the sake of a penny’. It was about an investigation into the use and possible abuse of County Court Judgements (CCJs) in which some of our debt collection agency members were mentioned.
We proactively responded to the journalist to highlight that we were unaware of any incidents and wholly rejected the suggestion that any of our members would intentionally have a judgment passed without a customer’s knowledge.
We offered advice to consumers to ensure that their details are up to date with all creditors and to lodge a complaint if they felt they had not been treated fairly. We also produced a briefing document ahead of a Westminster Hall Debate and in this briefing paper, we considered the issue and why we, as an industry, are not a cause for concern. We also hoped to highlight some potential improvements to the system and included a six point plan and possible remedies to reduce the number of adverse incidences. See the full briefing document here.
Ofcom’s persistent misuse policy
We also influenced the final version of UK communications industries regulator Ofcom’s new ‘persistent misuse’ policy, which came into force on 1 March 2017. The policy outlines how Ofcom will use its powers to take action if a person ‘persistently misuses an electronic communications network or service’. The main focus of the policy for our industry is on silent and abandoned telephone calls and Ofcom will prioritise enforcement action wherever forms of misuse cause significant consumer harm.
We had significant concerns about the original policy because the proposals to impose zero tolerance on abandoned calls would effectively have rendered the ‘compliant’ use of automated dialling systems impossible. Following our input, Ofcom revised the policy to take on board our feedback stating that: “Instead, we will apply the statutory definitions of both persistence and misuse on a case-by-case basis, taking account of the ordinary meaning of the words.”
Following on from our work with the University of Bristol Personal Finance Research Centre’s ’12 steps’ vulnerability guidance back in 2015, we’ve now provided significant support and input into its newly released ‘Vulnerability: a guide for debt collection – 21 questions, 21 steps’. Our members provided vital insight and data into frontline issues of dealing with vulnerable customers which enabled the research team to come up with the most practical, commercially viable and impactful guidance on vulnerability yet.
We were pleased to see that one of the steps acknowledged the need for greater staff support to minimise the impact on the mental health of those dealing with indebted people in vulnerable circumstances. We’re now going to continue working with the researchers to try and offer staff support as a member benefit.
We are working proactively with HMT whilst they explore the possibility of a statutory breathing space for customers and the viability of making fair-share contributions the method of choice when funding debt management. This is a complex issue and one that we have a unique perspective on that we feel needs consideration.
Fairness in Government debt collection
We’ve been working with the Cabinet Office to help devise a fair collection strategy for Government debt. Fairness in Government debt collection and other differently regulated markets such as utilities is something that has been top of our agenda for many years and we are the leading voice on the negative consequences of multiple regulators on the industry’s ability to consistently raise standards for customer benefit. We’re encouraging blanket use of our Code of Practice as the common denominator of best practice amongst the various different forms of regulation.
There are many other things we’re doing to raise standards in the credit industry and we’re proud of how far things have progressed in recent years.