Many sectors of the financial world have their own independent oversight bodies. The best known is probably the FCA (Financial Conduct Authority) but similar organisations operate in various areas of finance.
One notable exception, though, has been the debt enforcement sector — but that may be changing. A prominent think-tank has brought together various sides of the sector and proposed a framework for a new oversight body — the Enforcement Conduct Authority (ECA).
Why Is Oversight Necessary?
The enforcement sector has been facing problems for many years. The credit crunch of 2007 brought in a double whammy of less funds available in all levels of government and changes to the benefits available to low-income families. This resulted in these families having less money and at the same time being more actively pursued for debts by cash-strapped local authorities.
As a result, where before 2007 enforcement officers were mainly pursuing “won’t-pay” debtors, they’ve increasingly been used to pursue “can’t-pay” debtors by local authorities desperate to recover a total shortfall of £509 million, which the government has only given them till 2023-24 to pay off.
The Enforcement Conduct Authority
The government introduced reforms to the enforcement sector in 2014, in an effort to make practices fairer and more consistent. However, these reforms have had only limited effects, and a planned review hasn’t yet happened.
Not content to wait for the government’s review, think-tank the Centre for Social Justice gathered representatives from civil enforcement and debt advice bodies to draw up proposals for an independent oversight body. The balance they were aiming to achieve was between freedom for enforcement agencies to innovate in response to the changing needs of local authorities and responsibility to debtors who are genuinely struggling to repay their debts.
The result is a framework document proposing the establishment of an industry-funded body — the Enforcement Conduct Authority.
What Are the Aims?
- The ECA is intended to raise standards by assessing problems, monitoring practices within the industry and sanctioning firms for non-compliance with its regulations.
- The ECA is intended to improve accountability by auditing firms’ policies and procedures, analysing complaints and publishing an annual report that will be delivered to the Secretary of State for Justice.
- The ECA is intended to improve the level of complaints handling, which has been seen as very poor, by adjudicating complaints and complaints-handling systems, as well as issuing guidelines for enforcement agencies to follow.
- The ECA is intended to improve the way enforcement agencies respond to vulnerable debtors by developing guidance on vulnerability and affordability for agencies to use.
How Effective Will the ECA Be?
As it stands, the ECA will be an independent, industry-led regulatory body, which means it will largely rely on enforcement agencies signing up to its standards. It’s to be hoped, though, that the government will throw its support behind the authority, giving it genuine ability to enforce its standards.
In the meantime, give me a call to pursue your debts in a way that pursues the won’t-pays and works with the can’t-pays to find the best solution for everyone.