Priorities for the new government

There’s always a long “to do” list for a new incoming Government. Manifesto implementation is actually only part of the task, because ‘events’ and reacting appropriately always take up as much bandwidth. But remaining focused on the conditions that foster economic growth – in order to sustainably afford improved public service investment – must be at the forefront. 

The engine of any economy is consumer sentiment and spending power, which is why credit availability and a healthy credit cycle (which must naturally involve collections) should be borne in mind.

At the Credit Services Association (CSA) we will be pressing Ministers to improve public awareness of the benefits of engaging with creditors and collection agencies, dispelling myths and misconceptions that inhibit dialogue and knocking down some of the exaggerated fears that still exist. Problem indebtedness benefits nobody and resolving problem debt has to be a feature of the Government’s agenda. We want to see greater support and advocacy for consumer engagement - engagement with creditors, collections agencies, debt purchasers and regulated debt advice providers. Financial education, curriculum reform and awareness campaigns by the Money and Pensions Service (MaPS), the FCA and other public agencies can help in this regard. 

Action to hold those responsible for misinformation and whipping up vexatious claims is also overdue and regulators should turn their attention to those malign actors who seek to take advantage of fearful consumers desperate for a solution. More often than not, it is only those who mislead consumers into taking out inappropriate debt solutions or convince them they can be debt-free by pursuing ineffective and nonsensical strategies, usually built around widely-debunked or misunderstood legal and regulatory interpretations, that benefit, while consumers and creditors suffer the consequences. It is time for the purveyors of such “advice” to be held accountable in order to better protect the unsuspecting consumer. 

With more and more firms expected to provide tailored support to customers, we need reform of the customer vulnerability reporting framework to help firms deliver this and to more effectively minimise the reporting burden on consumers. Picking up the previous government’s plans to develop a ‘universal priority service register’ would be welcome but, as we called for in our response to the original consultation, it should cover a wider range of sectors and services. 

When consumers do take steps to repair their credit and enter repayment plan arrangements, it would be only fair if their credit scores held by the credit reference agencies actively reflected and rewarded this. At present there is little credit score incentive for individuals to do this, meaning those with defaulted accounts are treated the same by potential lenders, regardless of whether they are taking steps to remedy their arrears, and this ought to be a priority for the soon-to-be-established Credit Reporting Governance Body. 

The collections and debt purchase sector, like others across the financial services industry, is now very heavily regulated. Government must take action to rein in the ever-increasing costs of compliance and paper work bureaucracy which is beginning to inhibit competition and stifle innovation, costs which ultimately find their way back to the customer.