This response was submitted by the Taking Control coalition of civil society and debt advice organisations, including StepChange Debt Charity, which campaigns for independent regulation of the bailiff industry and other reforms to ensure fair and appropriate treatment of financially vulnerable people facing debt enforcement.
Our response noted that it is very difficult to land in the appropriate place on enforcement and vulnerability, and recognised that the ECB wants to mitigate the risks through its new approach. We welcomed the acknowledgement that vulnerability is chronically under recorded, reported or dealt with by enforcement firms. The intention of the ECB to move to a “safe by design” approach has considerable merits.
However, it is hard to reconcile the aims of protecting people with vulnerabilities but at the same time continuing with the enforcement process. In our experience, our clients are already vulnerable as they are likely to be on low or benefit level income, and have negative budgets with few assets, plus both physical and mental health conditions.
In many cases, the referral for enforcement action could be said to be inappropriate in the first place. However, creditors do not consistently have mechanisms in place to stop referring people in vulnerable circumstances for enforcement, or necessarily the will to do so.
We were pleased to see the ECB propose moving away from the limited list of vulnerable circumstances that was set out in the National Standards for Enforcement Agents in 2014. However, we raised concerns about its proposed definition of vulnerability, which we feel is unclear for a number of reasons; we therefore suggested a simpler definition. We also pointed out that the definition of potential vulnerability may also be operationally difficult to implement.
Whilst we appreciate that it may be possible to mitigate additional harms for people in vulnerable circumstances, we think it is too simplistic to suggest that an adaptation to the process would be sufficient. It is difficult to believe, for example, that someone who needs documents translated into another language or in braille or large print will not be experiencing additional communication difficulties or other vulnerabilities when dealing with an enforcement agents.
We concluded our feedback on the vulnerability elements of the proposals that in many cases the account should be returned to the creditor or local authority due to the inherent financial harm, the escalation in fees, the potential loss of possessions, and the stress, anxiety, worry and fear plus the worsening of existing mental health or physical health issues.
Moving onto the ability to pay aspects of the proposals, we warmly welcomed the ECB’s recognition that ‘no one wins with an unsustainable arrangement’ and that enforcement should stop where those subject to enforcement have no ability to pay. We also welcomed the recognition that while things are working well some of the time, the proposed standards are intended to ‘drive consistent improvement across the market’.
It is an important part of the ECB’s role to align currently patchy and often poor practice with responsible good practice. The nature of enforcement itself – particularly through doorstep visits – creates high risks of pressurised environments for people in vulnerable circumstances, which contributes or leads directly to unaffordable repayments and poor outcomes.
With these factors in mind, the ability to pay standards must be sufficiently strong and detailed to shift practice, address poor conduct, and account for the specific risks of doorstep enforcement. The standards have a number of welcome elements but do not yet do that in full. More than that, as drafted, they risk codifying aspects of poor practice at an early stage of the development of enforcement regulation. For example:
- They do not set important minimum expectations and go too far to accommodate practices that are not compatible with a responsible approach to ability to pay, including creditor requirements.
- We have concerns about the proposed approach to the treatment of assets in the ability to pay standards. This seems to overlook safeguards against unnecessary seizure of assets in the present system, and allow an enforcement agent to behave as many do now: namely, if the person subject to enforcement has an asset the agent can/should seize it, without consideration of the importance of the asset to the person’s actual situation and sustainable repayment (for example, if a car was required for work and there was no viable public transport option).
- The standards neglect to explicitly mention the use of objective affordability assessment tools, notably the Standard Financial Statement.
- As drafted, it is unclear how enforcement firms or agents would be expected to act in the event that a negative budget position was identified.
The coalition will continue to engage with the ECB as it considers feedback following the formal consultation period, with the intention of driving up standards and protections for those going through enforcement action.