27 April 2012

Government Departments Outsourcing Debt Collection

Government departments tasked debt collection agencies with recovering almost £60bn in unpaid consumer debt last year, according to figures release for the first time by the industry.

The Credit Services Association, the trade body for collection agencies that published the figure, said the that the amount of outstanding debt had been steadily increasing in recent years and grew by £6bn in the 2nd half of 2011.

A spokesman for the CSA said there had been "a cultural shift" which meant more government agencies were outsourcing debt collection.

"The economic environment has undoubtedly become more difficult and so it is no surprise that debts are rising,” CSA's president, Sara de Tute, said.

"But there are also other reasons, including 'new' creditors within the private sector and parts of national government who no longer see an issue with outsourcing debt for collection to professional and highly regulated agencies capable of recovering monies vital to the public purse."

Joanna Elson, chief executive of the Money Advice Trust said the figures made it clear that individuals across the UK were struggling to clear huge amounts of debt.

"We have seen just this week that the UK economy has returned to technical recession, but the reality for many people is that the recession never really went away at all, meaning they have been struggling to make ends meet for the last few years.

"When it costs more and more to put food on your table, heat your home and fill up your car, credit card repayments become less of a priority."

(H)