Debt Collection Trade Body urges organisations to come together in tackling debt crisis
03 April 2020
The CSA, the UK trade body for debt collection and debt purchase, has issued a detailed response to the Government in light of calls from a number of debt charities to call a halt to all collection activities and potentially write off billions of pounds of debt.
It says that rather than pulling away from each other in these challenging times, the Government, pressure groups and the debt advice sector should be working with the CSA and its members in determining a way forward. It urges a collaborative approach in coming up with policies that deal with a specific and clearly defined problem without causing additional issues that make matters worse, not better.
“Now is the time for clear heads and clear thinking,” says Peter Wallwork, CSA Chief Executive. “We need to resist calls for wholesale changes which may look like the answer but fail to take into account the bigger picture and the wider impact on society and our economy. We need to help the greatest number we can but in such a way that doesn’t damage the credit/customer ecosystem irrevocably.
“Losing contact with customers, for example, may make matters worse not better, especially at a time when the debt advice sector is already swamped with calls and our members’ teams are in the perfect position to help navigate customers through these uncharted waters.”
Mr Wallwork says he has already written to all of the c250 CSA members to urge them to show additional forbearance where it is needed and has been delighted with the way the industry has responded: “Many of our members had already taken proactive action to support their customers so it wasn’t a case of us telling them what to do but more them telling us what they’d already done.”
The CSA's members currently contributes £4bn to the UK economy – it also provides approximately £35m in voluntary FairShare and Levy contributions to the debt advice sector.
“It would be folly to put such funding at risk, simply because the consequences of an action had not been properly thought through, and this would directly impact front line free to consumer debt advice”, Mr Wallwork adds.
Mr Wallwork says that not everyone will be affected by the latest crisis to the same degree. Some will see their costs rise, their jobs under threat and their life changed beyond all recognition. For others there will be little or no impact at all, and so a draconian ‘one size fits all’ approach – which could see an automatic three-month suspension of activities – does not make for a sensible policy.
“Ministers need to recognise that CSA members already help millions of customers to manage their debts and support the most vulnerable by funding and working with the principle debt charities. But we have seen that these charities are already overwhelmed, so ceasing customer contact at this critical time will do more harm than good.”
CSA members act on behalf of nearly all of the major financial institutions, banks, credit card companies and the Government. But its members also manage more than 750,000 commercial accounts, mostly on behalf of small businesses, collecting more than £400m every year.
Mr Wallwork says the danger is that lines are becoming blurred: “When organisations call a halt to collections or even writing debts off altogether, they will be doing untold damage to our country’s small business community, many of whom are already under pressure to survive. With estimates that as many as 800,000 may fail in the next four weeks1, this is not the time to prevent them from recovering cash owed to them on the grounds of some spurious moral reasoning.
“While calls for further action from Government are understandable, and outwardly show compassion, it is imperative that the full consequences of any such action are properly understood.”
Mr Wallwork is also concerned that a debt ‘freeze’ might not always be in a customer’s best interests: “It is still money that has to be paid back,” he says, “and that could simply be storing up financial issues for later down the line. Our #heretohelp campaign’s central message still stands – earlier contact results in better outcomes.”
Why does it matter that the debt collection industry still functions?
- Members of the Credit Services Association (CSA) return c£4bn to the UK economy every year – the equivalent of building five new hospitals
- This includes £400m recovered for small businesses
- CSA members fund the debt advice charities to the tune of at least £35m per year
- CSA members have more than £67bn to collect at any one time
- Its members employ more than 11,000 staff, a large majority of those are based in the north of England
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