Government departments, local authorities and bailiffs are among the most unfair when it comes to the treatment of people in problem debt, according to a new report from StepChange Debt Charity.
The report – Creditor and debt collector conduct: What’s making debt problems worse? – claims that some creditors are failing to take vulnerabilities such as depression and other ongoing mental health conditions into account.
StepChange said its other findings show how poor bailiff practices, such as intimidation and the addition of excessive fees, are commonplace and make people’s existing debt problems worse, despite reforms implemented by the Ministry of Justice in April 2014.
The research indicates that where regulation is more robust, such as the Financial Conduct Authority’s regulation of consumer credit, there are better outcomes for clients.
The charity’s report is based on research from an in-depth survey of 1,794 of its clients.
They were asked to identify which organisations they considered to have treated them fairly or unfairly in relation to dealing with their debt.
Some 50 percent said they’d been treated unfairly by bailiffs, 42 percent by their local authority, and 36 percent by the Department for Work and Pensions.
High street banks and credit card companies performed significantly better in the treatment of people in debt, although the numbers who felt unfairly treated were still too high at around one in five.
Top of the league
StepChange also published a table of how consumers rated different types of organisation.
The table below shows how consumers rated them, by answering the simple question of whether or not they were treated unfairly:
1 Bailiff (50 percent said they were treated unfairly)
2 Local authority (42 percent)
3 Dept. for Work and Pensions (36 percent)
4 Mobile phone company (32 percent)
5 Debt collection agency (30 percent)
StepChange said the findings highlight a particular problem with the collection of council tax debts, given that 51 percent of bailiff visits experienced by the charity’s clients relate to council tax arrears.
Failing vulnerable customers
Stepchange also claims the research shows many creditors are seemingly not taking into account the wider vulnerabilities of people struggling with debt. Three in four (75 percent) of the charity’s clients identified themselves as vulnerable.
Depression (47 percent) and ongoing mental health conditions (16 percent) are the most common forms.
Almost half (45 percent) of clients who identified themselves as vulnerable made their creditors aware of their condition.
Despite being informed, firms did not take into account these vulnerabilities – 83 percent of those who made their creditors aware of their vulnerabilities said at least one creditor didn’t take this into account, while 35 percent said that none of them did.
By Marcel LeGouais