When making a deduction decision, the Department for Work and Pensions guidance says it will consider if a deduction is in the interests of the family. Despite this, our client survey makes it apparent that deductions do often cause harm.
What impact do third party deductions have?
Just over a quarter of our clients report they’ve had money deducted from benefits to go towards arrears. Our research also found:
- Over a quarter of those currently having money deducted have two deductions in place
- Almost 1 in 10 have three simultaneous deductions in place
- Clients in a vulnerable position are more likely to report they've had money deducted from their benefits
What needs to be done about third party deductions?
- They should only be used when they’re affordable and helpful to the consumer, allowing them to keep up with essential bills
- A new minimum deduction of £1 should be introduced
- New rules should be written on the treatment of vulnerable people
- Firms, guided by regulators, should move away from using deduction rates as a benchmark for debt collection
Download the paper now for the full picture.