Alan McIntosh calls for lenders to show forbearance as legal action against debtors rises sharply south of the border.
November is not normally a time known as the silly period. That is a time normally reserved for the summer, when Parliament closes, and everyone goes on holiday.
However, the last few weeks have been silly, not because there is nothing happening, but because many of the leading stories in the media have concerned the silly behaviour and comments of those involved.
From the loose comments of Boris Johnstone in relation to British-Iranian woman, Nazanin Zaghari-Ratcliffe, to the OJ Simpson-style coverage of Priti Patel driving to 10 Downing Street.
However, there are two lesser known stories, but still bizarre. The first concerns the comments of John Redwood, former cabinet minister and current MP, who strongly favours Brexit, and when writing in the Financial Times on the 3 November, suggested investors should stay clear of investing in the UK, because of rising levels of personal debt and the Bank of England’s recent increase in interest rates. With MPs like that, who needs Russian interference in our economy and democracy to undermine it?
The most bizarre for me, however, came on Saturday (11/11/2017), in the Financial Times, when, Malcolm Hurlston, former chair of the Foundation for Credit Counselling, the company that owns Stepchange, the UK’s largest debt charity, said in his capacity as head of the Registry Trust, that “Lenders should go for judgments”.
The comment was in response to new Ministry of Justice figures that show the number of County Court judgments awarded in England and Wales, in the nine months up to September 2017, were 910,345, a 34 per cent increase on the number for the same period in 2016.
Malcom Hurlston, who was awarded a CBE in 2010 for his two decades of work for the charity, also founded it in 1992 and is stated on his own website as still being the its president.
In calling for lenders to raise more court action against debtors, I can’t help but feel he is being silly. Financially distressed consumers, who were the people the charity he formed to help, will only face additional costs and expenses if lenders take his advice. That is not to mention the stress and upset that it will cause many of them and their families, possibly leading to unnecessary bankruptcies, with some losing their homes. What is disturbing about his comments is that he is making them at a time when Stepchange have been actively calling for the UK government to introduce a “breathing space” Scheme for debtors in England and Wales, based on the model of the Scottish Debt Arrangement Scheme.
It’s also made even more ridiculous when you consider the whole regulatory direction of travel in relation to debt recovery, since 2014, when the Financial Conduct Authority took over, has been to treat customers fairly and avoid, where possible, court action.
The fact his comments come so shortly after the introduction of the commencement of the Pre-action Protocol for Debt Claims on the 1 October 2017, is like salt in the wound.
I don’t know if Malcolm Hurlston remains the president of the Foundation of Credit Counselling, but surely if he is, he must consider his position.
As consumer debt levels reach £200 billion and it is estimated 15 per cent of consumers are over-indebted, this is a time for lenders to show more forbearance and work with consumers to deal with their debts, not to resort to legal action. I seriously doubt most consumer credit lenders would even be brave enough to openly admit a strategy of going for more judgements.
Malcolm Hurlston appears to be of the school of thought that lenders should use court action like sheepdogs, and herd financially distressed consumers through the doors of advice agencies and insolvency practitioners. This is not necessary for most borrowers, who anyone working in the money advice sector will witness are ‘can’t pays’, not ‘won’t pays’.
The problem is that if Malcolm’s advice is followed it will not have the effect, I can only presume, he intends it to have. It will only exacerbate the predicament many vulnerable consumers find themselves and force more into further debt. The fact that such a course of action is being proposed by someone who has so strongly been associated with debt advice and counselling in the UK for the last quarter of a century, is to say the least, disappointing.
I would hope, at the very least, Stepchange, as the UK’s leading debt charity would issue a statement distancing itself from the comments of its former founder and chair.
Alan McIntosh is an independent money trainer and blogger. His views are his own.