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Debt Collection News Roundup – September, 2017

Here at Access Credit Management we pride ourselves on keeping up to date with what’s going on the international debt collection industry.  We aim to bring our readers interesting and relevant news about the sector so once a month we publish a News Roundup.  This should keep you up to speed with all the important happenings in the industry and provide you with a valuable resource that that you can use to stay fully informed of all the latest news.  It would be interesting to know what you, the readers, think of the stories that feature here.  Please join in by adding your comments on our Facebook page, tweeting on Twitter or email us if you come across anything that you think we should include.

First of all comes the news that Ofcom, the communications watchdog, has updated its communication rules to protect customers from nuisance calls and to improve debt collection practices.  Under the new rules, phone numbers displayed to those receiving calls must be valid, dialable and identify the caller – calls not meeting these criteria will be blocked.  Debt collection rules have been extended from landline providers to broadband and mobile providers to ensure fair and transparent collection processes and disconnection practices are in place.  The new rules will apply to all UK communications providers from October 1st 2018.

StepChange debt charity claims that the roll out of Universal Credit (UC) with its increase in benefit deductions is pushing people further into debt.  The current system allows the Department for Work and Pensions (DWP) to deduct money from benefits in order to cover payment arrears to third parties like utility companies and local authorities.  The amounts deducted, dubbed third party deductions or TPD, are paid directly to the creditor until the debt has been settled.  At present, the DWP is allowed to deduct £3.70 per bill, per week but under Universal Credit, the amounts allowed to be deducted in this way are likely to increase significantly which some claim will lead to financial problems and further debt. 

Meanwhile, debt collection is one of the biggest challenges face by utility companies, particularly when it comes to water and energy, an issues which is having a negative impact on the financial performance of some utility providers.  Statistics have revealed that as many as 1.4 million UK residents have utility bill debts and 16% of these consider their provider to have been unsympathetic towards them, putting them under pressure to repay arrears.  For some utility companies, outstanding debts can be as high as their annual profits.

Two parliamentary committees have urged the UK government to set up in independent public inquiry into the £200 billion worth of debt collectively faced by British households.  Conservative MP Nicky Morgan who chairs the Treasury select committee said that “debt is a huge emotional burden for people” and revealed that problem raised by her constituents are often the result of unstable personal finances.  The current debt has been amassed on personal loans, credit cards and car deals and is now at the same level as it was before the 2006 financial crisis.  Recent warnings from the governor of the Bank of England that interest rates are likely to rise in response to rising inflation coupled with the skills shortages that result from Brexit will increase pressure on people’s incomes and the situation is likely to get worse unless it’s addressed.