Fairer debt, fairer society
The impact of the rising cost-of-living is putting pressure on families across the UK. At Lowell, we believe that simple reforms could help ease the pressures on families struggling debt and lay the groundwork for a better financial future for the UK.
Being in debt can come as a shock. Our customers often tell us that they never expected it to happen to them, but life happens.
They lost their job. Split up from a partner. Suffered an injury. The everyday events that can happen to any of us, at any time. For many people, this can be enough for their finances to spiral out of control. But we’re here to help, 73% of customers say their mental wellbeing was better after contacting us.
Tackling this problem debt starts with breaking down the barriers that stop customers from engaging with their debt problem. To achieve this, we need to remove the stigma of debt and the fear associated with talking to creditors. That way, we can help customers early before their debt struggles deepen, and they find it harder to rebuild their financial health.
At Lowell, want to help the new Government understand the challenges facing millions of people in debt, and reshape the credit system so it works better for them.
We spoke to our own customers to get their take on how politics affects debt - and how debt affects them. Their honest feedback helps us to ensure we’re doing the right things, and helps us to understand what needs to change to make the system fairer for everyone.
And that’s where our three ASKS come in:
1. Fairer Local Authority debt collection
2. Statutory bailiff regulation
3. Modernisation of the Consumer Credit Act
ASK #1: We want to see fairer Local Authority debt collection
Local Authorities rely on inflexible debt collection practices to try and recover debts like unpaid rent, council tax, and housing benefit overpayments.
It’s plain that the current system is failing everyone involved – it doesn’t work for debtors, and it doesn’t work for councils. Our own customers agreed: 44% of Lowell customers we spoke to have currently or previously had a debt with a local authority, and more than two thirds (67%) of those people said the local authority actively caused anxiety or stress in their debt collection methods.
Many households can’t afford to pay their bills and enforcement officers taking tough measures to recover unpaid debts only compounds this. It often leaves people feeling overwhelmed and anxious about what to do next.
Instead, we want to see the highest standards private sector and Government applied to Local Authority debt collection. Higher standards would mean more engagement from people in debt, better outcomes and more local authorities collecting the money they need to provide services.
ASK #2: We want to see statutory bailiff regulation
Bailiffs are what most people think of when they think about the debt industry. Poor behaviour on their part makes it harder for the sector to build trusted relationships and work together with our customers.
More than a million people find themselves dealing with bailiffs every year, including many of the most vulnerable people in society. Consistently high standards could make a dramatic difference to the way these people are treated, helping them rebuild their finances and protecting their mental health.
There’s a huge amount of fear about bailiffs knocking on the door, which can be stressful to people who are already struggling to cope – and adding this kind of worry and fear to vulnerable people is unacceptable. To put this into context, a third (31%) of Lowell customers have had a bailiff come to their home. Of these, 69% said that enforcement officers caused anxiety and/or stress in their debt collection methods.
At Lowell, we work with our customers to help them understand the debt recovery process – we don’t use doorstop collectors, and council bailiffs would only ever be involved if a County Court Judgement has been granted. We want to make sure our customers understand that as long as they’re working with us, there are lots of ways that we can help, and a CCJ doesn’t need to happen.
We hope the Government can do the same work: to step up and make sure that all bailiff firms are subject to independent regulation through a statutory regulatory body. As more people fall behind on bills, getting this right could help a lot of people.
ASK #3: We want to see modernisation of the Consumer Credit Act
We welcomed the last Government’s ambition to reform the Consumer Credit Act and we hope that the next can continue this. A modernised version of the act could make a world of difference to people struggling with debt.
The Consumer Credit Act passed into law in July 1974. At 50 years old, it’s understandably outdated and not made for the modern digital world. It’s confusing for consumers and adds unnecessary costs to businesses. Just 30% of Lowell customers have a good understanding of the CCA, and the remainder either don’t know much about it or have never heard of it at all.
The current approach insists that creditors send long, jargon-filled, letters to customers that intimidate them and make it harder for people to get the help they need.
We’d like to see simplified language that better supports customer understanding, together with permission to adapt communication methods based on what the customer wants or needs.
In short, we want to see a reformed CCA fit for the modern world that helps, rather than hinders, consumers.
People want change
There are plenty of conversation points during an election, but as the dust settles on electoral chatter, it's vitally important that the millions struggling with debt aren't lost in the conversation.
Speaking to our customers reaffirms this: more than half (61%) of Lowell customers wanted to see the previous government offer more general financial support to prevent debt accumulating, and more than half (56%) wanted additional assistance with debt relief.
With a new parliament ahead, we'll continue our mission to destigmatise debt, support people who are financially vulnerable, and work towards a fairer and more equitable debt industry. We truly hope that the new government will join us in this important work.
Get in touch
To find out more about the way we work and read our other guides on debt-related topics, be sure to check out our Debt Guidance hub. You can reach out to us directly on parliament@lowellgroup.co.uk or via our social media channels: X - @lowellfvi LinkedIn - @Lowell-Group
Methodology
Survey conducted by Lowell to their Customer Panel, 300 respondents – June 2024
Our Manifesto Pledges
Our three asks of the new Government
1. Fairer local authority debt collection
We’re asking for the Debt Fairness Charter to apply to Local Government, which will bring Local Authority debt collection up to the high standards enjoyed by customers of the private sector.
· The current system for recovering Council Tax debts isn’t working. It punishes and harasses debtors, which both makes life worse for people already struggling and is ineffective.
· Bringing local government standards up to those in the private sector and central government will help the wellbeing of people in debt and bring in more cash for the council.
2. Statutory bailiff regulation
The unregulated, bad behaviour of bailiffs is pushing people deeper into crisis. We want to stamp it out by putting the Enforcement Conduct Board on a statutory footing.
Explanation
· Some bailiffs do not treat vulnerable consumers with the care they deserve, worsening existing mental health problems and driving debtors further into problem debt.
· Statutory regulation will see higher standards and the fairer treatment of vulnerable debtors.
· Better regulation could make a dramatic difference to their lives, doing away with a world of intimidation and veiled threats.
3. Modernisation of the Consumer Credit Act
We want to help make life easier for people in debt by prioritising reform of the Consumer Credit Act in the next Government.
· The CCA insists that creditors interact with customers in a heavy-handed, legalistic way by sending them intimidating letters, an approach which no longer works and often has the opposite effect, discouraging engagement and making it harder for people to work out what they need to do and how to get help.
· Modernising the CCA would improve communication between creditors and consumers, helping people get the support they need both before they fall into problem debt and when they’re struggling to escape it.
Published by Alex Hickson-Burr on 4th July, 2024