Community Money Matters

I am Ripon Ray - a debt & money expert. This blog captures the spirit of my work. I am trying to incorporate my written journalism, weekly radio shows & YouTube, podcasts and campaign work in the context of money and debt issues.

Friday, 17 August 2018

Socialist Lawyer is the magazine of the Haldane Society of Socialist Lawyers.   It has published my article on council tax debt problem in the UK.

Wednesday, 15 August 2018

(Youtube & Radio) Your Money Matters...with Ripon Ray - Weekly Show

This is your weekly Money Matters live stream on You Tube, Betar Bangla Radio & Twitter.

Tips of the week:  Five Ways to Save in Retirement

This Weeks Guests :  
Melanie Rochford - Business & Development Director of Hackney Foodbank - will be exploring  the causes of the rise of foodbanks... and what is to be done?
Sabrina Dubash, Welfare Rights Expert, City of London, a benefit expert who guides us on the new benefit, Universal Credit, and how to prepare for a cheap wedding in this summer.

Saturday, 11 August 2018

(Youtube & Radio) Your Money Matters...with Ripon Ray - Weekly Show

This week I talk about the draconian Universal Credit and ways to survive it. Joining me on Betar Bangla Radio and on YouTube is Alex Tiffin - a renowned blogger, campaigner and a journalist. I will also explore the meaning of Hire Purchase goods & services and the positive and negative aspects to such purchases.

Tips of the Week: How to get compensation from airlines when your flight is delayed or cancelled?!

Thursday, 26 July 2018

Those who are in their 50s are susceptible to neglect and poverty from many different directions

‘I am thinking of getting my pension funds released to pay for my rent arrears - do you think my landlord will stop possession proceedings if I pay it all off once I get the funds?’

This is what one of my clients said to me when he first came to seek advice for his rent arrears. It was in September 2016. He was 56 years old but would not be eligible for the state pension for another decade. What struck me about him was his proposal to unlock his pension funds to pay for his rent arrears. It made me think about men in his age group, how they lived and how severe their financial and other problems can be and the challenges they face trying to rectify it. These are problems that, as things stand, will persist until their retirement age.

As I dug deeper into this gentleman’s personal circumstances, I discovered how he had fallen into poverty. His life was thrown into chaos once he was faced with early retirement. He previously worked for a local council and his role was made redundant. He was presented with two options: retire or take compulsory redundancy from his job. This was a role had held for over 25 years.  He opted to take early retirement. He struggled to adjust to his new circumstances. His marriage came under strain due to money troubles, his depression and anxiety. His wife initially tried to help and support him, but she found it hard to cope with his mental health problems.  As a result, she asked him to leave their council home. His 20 year marriage ended a year after he retired.

He lived rough for a few days and then found private accommodation in Summer 2016. He paid £750 per month for a room.  He shared the flat with two other housemates whom he rarely saw and had some savings from which he paid his rent. However, he used up his savings and could no longer afford the rent.

When he moved into the room, he did not know whether he could claim housing benefit for it. If he had applied for housing benefit before 1st April 2016[1], he could have backdated it for the three and a half for months he was in arrears. The actual rule, in force at the time, allowed him to claim up to 6 months of his initial claim date if there was a good reason for it. From 1st April 2016 any claim made were only allowed to be backdated for only one month regardless of the reason.  This was the new policy introduced by the current Conservative Government.

The Coalition government (2010 - 2015) introduced another policy. From 1st April 2015 any person, who is 55 years old or above, could gain access to all their pension funds.  The purpose of this policy was to put the pension holder in control of their pension funds and withdraw all their savings if they choose.[2] Given this man’s circumstances, I doubt whether he was choosing to get his pension fund released to better himself. A more accurate reason would be that he was withdrawing his pension funds to avoid destitution.

Initially I had no idea of such a rule when I advised him because I recommended to him that he see a financial adviser. If he has, subsequently, fallen into the wrong hands, it could be that he may have lost more than his accommodation. There has been a dramatic rise in fraud related to unlocking pensions. A large number of people have been duped into releasing their pension early only to then lose all of their life savings. Fraud Action, which investigates online fraud, reported that between April 2014 and May 2017 fraudsters stole nearly £44 million[3] by giving false advice and transferring the money to a broker. The promised returns did not materialize leaving the victim penniless.[4] Although I have had no further contact with the man beyond our first debt advice meeting, I hope he does not become one of the victims who have been conned in this way.

There appears to have been little assistance given to him to aid his recovery from the trauma of separating from his wife, being made redundant from his work and the anxiety of being evicted from his home. At face value he did not appear to be in a mental health crisis. If I were in his situation, I would have needed professional support from a mental health practitioner to recover. According to Age UK, half of adults aged 55 and above have experienced mental health problems. In terms of understanding the data in another way, it is about 7.7 million people. [5] Age UK’s research also shows that 35% did not know where to go for help and support if faced with such a crisis in their lives. [6]

Could there be any other support he may need if his landlord successfully evicts him from the property and he becomes homeless again?  It is going to be difficult for him to qualify for the local council’s priority list for social housing based on his existing circumstances. According to Shelter the waiting list for social housing in the UK has reached a record high of more than a million.[7] It is hard to believe that local authorities would prioritise him. Households with children and severely disabled members are often given priority for emergency accommodation. The local council may also argue that he made himself intentionally homeless by not paying his rent in time and getting into rent arrears from his landlord. I believe  that he is in debt because of the current government’s rule change on housing benefit claims.

In terms of him getting him ready to re-enter the labour market,  I am not sure whether this is possible until he has a stable home environment. There are over a million people in the UK, in their 50s, who are willing to work but cannot work due to age discrimination. This has been emphasised by the Women & Equalities Committee who found that the labour market prefers younger workers. [8]  Even for this man to start thinking about employment he would require professional advice, help with his CV, assistance in cover letter writing and preparation for job interviews. He may also require appropriate clothing to wear for an interview. The process of returning this man to the labour market appears to be very complex indeed.

This tragic story has illustrated how those who seek debt advice often do not just have problems concerning money. They bring many other societal issues that are beyond my control as a Debt Adviser.  This gentleman initially asked me if his landlord would stop eviction proceedings if he released his pension funds. In truth this man requires more than advice on debt if he is to stabilise his circumstances and live a decent life.


Thursday, 7 June 2018

Current Welfare Reform putting poorer communities into destitution

I have noticed a dramatic change in my line of work as a debt adviser following the introduction of Universal Credit in 2013.  It has become common to see clients who are in rent and council tax arrears. In areas where it was initially rolled-out, 73% of claimants were in arrears and owed on average £772. Ian Duncan Smith, former Secretary of Department for Work and Pensions, stated that the policy was meant to take people out of poverty.  Its impact has been to the contrary. 

It was one of several welfare reforms introduced by the 2010-15 Coalition Government under the Welfare Reform Act 2012 which was planned for implementation by March 2022 as part of overall austerity measures.

Universal Credit replaces the following benefits: Job Seekers Allowance, Employment Support Allowance, Housing Benefit, Working Tax Credit and Child Tax Credit. Universal Credit affected claimants of working age. Claimants would now receive the benefit monthly and would be responsible for managing their money. For example, rather than making payments direct to landlords, the claimant would be required to update their details by going online. 

Council Tax Benefit is no longer included as part of the claim.  Local authorities are responsible for formulating their own policy in regard to the Council Tax Reduction Scheme. At the same time, they are not allowed to increase it by more than 5.99% year on year without calling a referendum. Most councils in the UK are no longer giving full Council Tax Reduction even to individuals who were deemed too poor to pay prior to the enactment of the Act.

Severe disability and enhanced disability premiums that topped up the legacy benefits were scrapped.  

Leigh Day & Co Solicitors challenged the lawfulness in removing the disability premiums as existing claimants who migrated to the new system saw a loss of more than £150 per month of benefits on the basis that it is discriminatory.

There were other challenges faced by many claimants. Until 7 November 2016, a couple with children would be capped at £500 per week, whilst for single claimants it was £350.  From 7 November, the cap was reduced further depending on where clients resided.

- £442.31 a week if you are a couple or have children and live in London

- £384.62 a week if you are a couple or have children and live outside London
- £296.35 a week if you are a single person and live in London
- £257.69 a week if you are a single person and live outside London. 

In areas where Universal Credit was first introduced such as in Oldham one in four tenants were threatened with eviction according to First Choice Homes, one of the biggest social landlords in the area. In Thamesmead, New Charter Housing confirmed 85% of its tenants were in arrears when they moved to Universal Credit compared to 18% under the legacy system. 

The Housing element of Universal Credit faced problems due to the requirement for some claimants to show a recent tenancy agreement. Also, if they were affected by the bedroom tax, the housing component was decreased by 14% if they had one spare room. If they had two spare rooms, reduction of Housing Benefit is 25%. To cover the shortfall, claimants may apply for Discretionary Housing Payment; though not everyone who applies is successful.

The Trussell Trust, which operated 30 food banks in the full Universal Credit roll-out areas in England and Wales, published a report: ‘The Left Behind: Is Universal Credit Truly Universal?’.  The Trust’s data showed that 70% of foodbank users were in debt, 57% experienced issues with their mental or physical health, and 56% experienced housing problems due to the introduction of the policy. 

The DWP’s draconian benefit sanction was intensified parallel to the implementation of the new benefit system. According DWP’s own data from August 2017 and October 2017, 38% of all the Universal Credit decisions resulted in a sanction and 71% of these accounted for not attending an interview. 

According to Citizen Advice, claimants who are self-employed may lose on average £630 a year compared to an employee due to their presumption to have been earning the National Minimum Wage (NMW) under the new scheme.  

It seems that those who were deemed too poor to pay their rent and council tax prior to the introduction of the welfare reforms, now must pay towards their council tax  whilst claiming benefits. As a debt  adviser, I am seeing clients who are in rent and council arrears on a more frequent basis. This leads me to conclude that the system does not care about those who are struggling to make ends meet.

YouTube:  Veda Petre, Senior Welfare Rights Adviser, on behalf of Macmillan Cancer Research, explains how Universal Credit works for her clients

Friday, 13 April 2018

What is to be done with scammers who prey on your money?

In 2016 in the United Kingdom, according to the National Crime Survey, you were 10 times more likely to be robbed at your computer by someone based in another country than be a victim of physical theft. Financial losses due to being a victim of fraud in such a scenario can be quantified and maybe refundable. Mental and emotional suffering caused by these perpetrators may be a life changing experience for so many vulnerable individuals. How can you avoid minimising devastating financial losses? What remedies do you have available if you have been a victim of such a horrific crime? Are you entitled to any form of support when you have been the victim of scammers?

I know someone who refused to speak about being a victim of a scam in public due to the shame involved. He is a pensioner in his late 70s. He lives alone. He was a proud independent and self-sufficient man. He managed his money meticulously.  His life changed dramatically once he became a victim of a sophisticated scam.

This is his story. Someone climbed onto his roof uninvited and damaged his roof tiles. The victim brought in a professional roof tiler to fix the damage. It cost him a few thousand pounds which he paid out from his savings. Straight afterwards he received a phone call from a stranger. The imposter introduced himself as being a member of the police force. The police needed his help to catch criminals who had committed a fraud otherwise they would carry on doing it with other victims. To verify the caller’s genuine status, he suggested that he called 999 to make sure that the call was genuinely from the police.  However, unbeknownst to him the phone line was open and he was actually talked to his accomplice.  They instructed him that he must not disclose their activities to anyone. It must remain a secret. They quoted national legislation to build trust. They said that to get hold of the perpetrators his support in the process was needed. Thus he was asked to transfer £10,000 into a designated bank account supposedly to aid tracing the perpetrators. It was said that the perpetrators could then be caught in the act of withdrawing the money from the account. 

Due to the persistent phone calls and ‘reassurance’ that he was doing the right thing, he transferred the money online from his bank under intense pressure. He made the transfer by a single click.  Once it was transferred, the callers disappeared from contact. Within minutes he phoned his son. He was very cautious about how much information he disclosed to him. His son pointed out that something was not right.  His son then telephoned 999.  The victim has been anxious about building trust with anyone else since and he has sought support from his GP.

He told his bank about his emotional state when he transferred the money. The bank representative told him that the money had already been withdrawn from his account. Also, he authorised it by confirming the transfer on his phone.  There is nothing the bank could do. A similar case was mentioned  in the Hackney Gazette:

An issue like this raises a question as to what extent the banks are responsible for transferring the money when it was made with the ‘authority’, ‘consent’ and ‘free will’ of the victim.  In this case, clearly, this was not a free will scenario and the consent cannot be said to have been informed rather a direct result of deception.   He was preyed upon by scammers and the bank could have taken extra precautionary measures to mitigate the losses.

There are two potential ways to remedy the blow: pursue the case through your bank at first and make a complaint to recover the money. If you were in a vulnerable position, there is a duty on the service provider to take reasonable care with your money. In this case, the financial institution has a duty of care regarding your money when consumers are vulnerable to scams.

Secondly, if you have made a transfer of money by using a credit card you can make a claim under section 75 of the Consumer Credit Act  1974  or charge back where you paid for goods or services and it turns out these were neither available or the ‘seller’ has vanished. Under the section, the credit card company is jointly and severally liable for any breach of contract or misrepresentation by the company.  For the section to apply the item or service you purchased has to be more than £100 and not more than £30,000.

If the financial institution is unable to offer an adequate remedy, try taking your case externally to The Financial Services Ombudsman and/or bring a claim in the county court.  The other option would be to contact Fraud Action to get a crime reference number and the case will be referred to the National Fraud Intelligence Bureau for analysis by the City of London Police.  According to Which?:

‘Not every report results in an investigation, but each helps build a clear national picture of fraud’.

Professional support maybe needed at some point due to psychological impact scammers can cause. If this is you contact Victim Support or Think Jessica. They provide emotional and practical help to victims of crime and scams. Samaritans Helpline is another service available, if you feel anxious and need someone to talk. If your situation is severe and you require care and support, you can contact your local council’s Adult Social Services Department. The local authority will assess your means and your health for the purpose of assessing what advice and support it can provide directly or procure from other providers. There maybe Safeguarding issues that the local authority social services department should consider in this and other matters. Your local GP can also refer you for therapy under the NHS.

There are precautionary measures you can take to avoid being scammed in the first place. If you see in a shop window or on Gumtree a ‘To Let a Room’ and you think: oh my god – this is cheap! It’s too good to be true!’  and this is your first impression then perhaps, it is too good to be true in reality. As stated by Marc Lancaster from Tower Hamlets Council’s Trading Standards on East London Radio’s Money Matters:

‘Instead of believing what is said, start to investigate it and ask a thousand questions.   Never ever transfer your money straight away or give money up front’, He emphasised that true renters are not going to ask for a transfer of money so quickly without giving a contract in the property.

As he pointed out:

‘Ask for the landlord’s identity to find out whether the person and the provider is genuine.

According to Fraud Action:

Check with your student union or accommodation office as many Universities and Colleges will have an approved housing list. Also look for accreditation membership such as National Approved Letting Scheme (NALS), Royal Institution of Chartered Surveyors (RICS) or Association of Residential Letting Agents (ARLA).’

Being investigative will take you further. Your landlord or agent has to secure your rental deposit by law. The Housing Act 2004 introduced two requirements:

1.    Your deposit should be protected in an authorised scheme within 14 days of receipt (increased to 30 days of receipt from 6 April 2012; and

2.    You should be provided with prescribed information about where the deposit protected scheme provided by the landlord within 14 days of the deposit being received.

If your landlord or agent is unwilling to provide information regarding the scheme,  he or she is breaking the law.  Check whether the terms of tenancy set out an Alternative Dispute Resolutions process to remedy the issue. If it does not state a due process, the County Court is available to resolve such a conflict.  Check Shelter’s website here:

Scammers are using modern methods to prey upon victims to make money swiftly. The repeated advice would be: be cautious and ask questions before you make your decision to identify the genuineness of the person on the phone or online. If money has been transferred you must act quickly, there is a chance that the money has not gone through. Use your right to make a complaint and take it externally to challenge these companies based on the regulatory body that regulates their affairs. There are also criminal proceedings to be followed because what the perpetrators have done is criminal.  Do not to transfer your money if in any doubt. Seek advice.

Click on the link below to listen to my radio podcast:

Friday, 16 March 2018

Is Council Tax really Poll Tax? Where is the momentum for a new campaign?

 ‘I have not been able to pay my council tax for last four years. Bailiffs have lied to me to get money from me. I still can’t afford it!’ says Joanna Robinson on Money Matters show on East London Radio in March 2018. During the period 2016-17, bailiffs were used by councils on nearly 1.5 million occasions in order to attempt recovery of council tax arrears. As in Joanna's case, residents were summoned to court for being too poor to pay - accruing court costs, subjected to the ignominy and anxiety having to face enforcement agents, and already too poor to pay, further indebtedness .  As I hear the horror stories of bailiff’s knocking on debtors’ doors under the new Council Tax Reduction Scheme (CTRS), I am beginning to worry that the Scheme is really just a Poll Tax rehash.

I was too young to remember what the Poll Tax was when it was first introduced in the late 1980s. My parents never spoke about it. In my work I started to notice from 2013 onwards that more debtors were seeking advice from me primarily regarding council tax arrears. Councils say they need to charge residents more; they blame the central government’s austerity measures for their budget shortfalls and therefore increased charges are necessary. What, then, was this Poll Tax to which I am drawing comparisons with the Scheme?

The Community Charge was introduced by Margaret Thatcher’s government in the late 1980s. It was a fixed tax per adult with reference to the electoral register – hence the term ‘Poll Tax’. There were differences in the amount charged between councils throughout the country.  In Westminster, London, according to the Guardian newspaper:

‘The Duke of Westminster, who used to pay £10,255 in rates has just learned his new poll tax: £417. His housekeeper and resident chauffeur face precisely the same bill.’

With few exceptions, such as those with severe mental impairment, members of religious communities and those sleeping rough, there were no exemptions.  Even those receiving income support still had to pay 20%. According to the government’s own survey 2.8 million people did not pay Poll Tax between 1991-2.

To recover such a mountain of unpaid debts, councils throughout the country tried to recover sums from workers’ salaries; and some of those on benefits had money deducted from their benefits. However, in most instances, local councils were not able to recover sums from benefits since what was owed was often too large to be recovered within the relevant financial year, once the Liability Orders were obtained from Magistrates Courts. In such situations councils would pass these debts to private bailiffs for recovery.

According to local law centres in Bristol, bailiffs delivered over 4,000 notices in May 1991 for non-payment; only half a dozen of them were recovered. By July 1991, when the tax had been in place for more than two years in Scotland, bailiffs had carried out over 41,100 visits but they hadn’t managed to sell goods of a single individual. According to Hackney Gazette, debt collectors themselves incurred cash flow problems because they needed to employ more people to recover arrears but received less money from Hackney Council.

‘Rayner Farrar & Co…had 15,000 liability orders…Four out of five of all those Liability Orders weren’t collectable because the Poll Tax register is in such a terrible mess…We desperately need accurate financial information. It is not financially viable for us to act for Hackney Council any longer, we’ll go bust if we continue.’

The Labour Party did organise a campaign, Stop It!, in response to outcries.  Its priority, however, was to win the national election and to replace the Tory government in Parliament. It was not going to resolve the immediate concerns faced by poorer residents and campaigners who were getting understandably frustrated with the way things were.

The Anti-Poll Tax Union, a national campaign was set up in 1987 to organise protests or non-payment of Poll Tax.  Concern was growing across the country. Initially there were 5 or 6 activists organising in small localities but within months they had built a membership of over 200. Many of them organised door–to-door campaigns, protests outside local council buildings and had ‘No Poll Tax Zone’ signs in local shops and houses. In other areas, there were informal groups of individuals who came together to agitate against the Poll Tax. 

Regarding the now widespread use of bailiffs, different tactics emerged in Scotland, England and Wales. In Scotland, the focus was on getting hundreds of people outside homes which were threatened and physically stopping the bailiffs.  In England and Wales, the main focus, as part the Anti- Poll Tax Union's strategy,  was to make sure that people knew their rights.  In the law centres in Bristol, they distributed leaflets and contacted all the local radio stations to inform and unite residents.

The pivotal moment in the Poll Tax movement was the national demonstration 31 March 1990 took place in Trafalgar Square called by the non-payment campaign. Initially it started as a peaceful march but by the end of the day 341 people had been arrested and thousands injured. Although the government argued that the violence was pre-planned, many argued that violence was provoked by only a small number of protesters and by the violence of the police themselves.

Due to the unpopularity of the tax nationally, it was replaced in 1993 and many would argue it brought down Margaret Thatcher as Prime Minister. Subsequently, residents in receipt of minimum state benefits received full council tax support; council tax was charged based on the size of their property; like previous rates system, along with other exemptions to ease the burden on those deemed too poor to pay.

Two decades later: new welfare reform was introduced by the Tory government - the overwhelming majority of local authorities, either Tory or Labour, expect a minimum contributions from residents, whatever their circumstances. Sound familiar?

Under a Freedom of Information Request, Child Poverty Action Group (CPAG) and Zacchaeus Trust 2000 obtained data and undertook a research project on the impact of the introduction of the new CTRS in local communities around London.   Their findings were published in Still Too Poor To Pay in 2016.  It appears that the overwhelming majority of councils in London were charging poorer residents. Over 318,000 court summons had been issued to London’s poorest households since April 2013 after falling into arrears.  Almost 250,000 low income Londoners were charged over £27 million court costs. The figures are set to increase from April 2018 since many councils, facing further cuts to budgets, have been passing on the burden by increasing charges to the poorest people.

Nationally the data is even more shocking - more than 2.3 million cases were passed to private bailiffs in 2016-17 by 252 local authorities, according to the report published by Money Advice Trust’s Stop the Knock. Over 50% of the recovery sums sought was for council tax arrears. Just as in the Poll Tax period, many councils are unable to recover the council tax through benefit reductions. After a Liability Order has been obtained the amount of the debt often cannot be claimed from benefits within the relevant financial year, given what can legally be deducted from weekly benefit. Inevitably this paves the way for councils to use private bailiffs.

In light of such shocking statistics, different councils have taken different steps to address hardship in the community.  A handful of councils have given full Council Tax reduction to their poorer residents, as in the case of the London Boroughs of Tower Hamlets and Camden, whilst other councils have carried on demanding money through the courts and bailiff enforcement action. The London Borough of Hammersmith & Fulham has instigated an ethical enforcement approach and will end the use of bailiffs for council tax arrears collection from 1 April 2018.

‘Heavy handed debt collection in the public sector is counter-productive: court action, bailiffs and lawyers call cost money, and can create high levels of stress and anxiety in families that find themselves in debt’ said Cllr Max Schmid, Cabinet Member for Finance of the council.

What can we do? Many ward members put forward motions to the Hackney Labour Party once the council began a consultation in November 2017, increase minimum council tax contribution from 15% to 20%. The overwhelming majority of the members of the Party voted against the rise. Local trade unions, Tenants and Residents Associations and advice charities also opposed the council’s proposal. Regardless of this resistance, the council decided to increase the contribution by 3.8% on the grounds that central government had cut at least 10% of the council funding each year since 2013 and in order to continue to provide essential services in the borough. 

Regardless of the political make up of local councils, there has been a trend to charge those least able to pay council tax. If they are to pay, many are either using credit cards or getting loans from pay day lenders with all the attendant financial risks. I hear this constantly in my debt advice work. Further evidence of financial difficulty is indicated by the rise of people using food banks.  The Trussell Trust Foodbank Network distributed just over 1,100,000 emergency three day food supply packages to people in crisis 2015-16. Between 1 April 2016 and 31 March 2017 distribution had risen to near 1,200,000 emergency packages.

The situation for poorer people and communities is getting worse. Sadly, local council policy is very similar to what it was during the Poll Tax years and compounds the impact of Tory austerity policies. The real challenge is: can we organise our communities? If we can then in what form - who is strong enough to stand, and how can we manifest sustainable shift to a more just and effective system? Otherwise, I fear, millions of people like Joanna, are going to be left to suffer in silence.

Click on link below of the radio podcast:

Wednesday, 14 February 2018

Christmas is over - what responsibilities do creditors have now?

I noticed how busy members of staff at the London Community Credit Union (LCCU) were during the Christmas festive period. They were very equipped for the season by hiring extra staff. Creditors undeniably know that the period leading up to Christmas is one of their busiest. During the same period, for me, as a debt adviser, its one of the quietest. 

Why is it so busy for them and least busy for me? The answer lends itself to supply and demand theory: consumers are borrowing to put Christmas presents underneath Christmas trees for their loved ones and spending on parties leading up to the New Year and holidays. In such an atmosphere, consumers are less likely to think about their debts but more likely to spend - spend - spend. The unwritten policy held by lenders during this time is to open their doors to borrowers to accommodate their seasonal borrowing habit. There is no doubt profit to be made on the return for credit.

The Bank of England states that on average a typical household in the United Kingdom spends over £2,000 per month. The same household spends extra £500 in December.  Obviously,  the spending pattern of some consumers is clear to some of us. In such a scenario what are the responsibilities of creditors when they become players in the consumer credit market?

To lend legally to consumers in Britain, a business must be approved by the Financial Conduct Authority (FCA). If it does not register as an approved lender with the FCA to undertake consumer credit activities, it is lending illegally.  The FCA can bring a prosecution against it for breaching the Consumer Credit Act 1974 and the Financial Services and Markets Act 2000. Apart from registering with the related authority, what other obligations do creditors have when coming into contact with consumers in order to lend? 

To prevent an individual getting into hardship and lending unreasonably the creditor has the responsibility to assess the means of the consumer.   Under 5.2 of  FCA’s Consumer Credit Sourcebook (CONC) a firm carrying out a credit worthiness assessment required must consider: 

'(a) the potential for the commitments under the regulated credit agreement to adversely impact the customer's financial situation, taking into account the information of which the firm is aware at the time the regulated credit agreement is to be made; and 

(b) the ability of the customer to make repayments as they fall due over the life of the regulated credit agreement, or for such an agreement which is an open-end agreement, to make repayments within a reasonable period.' 

I have been a debt adviser for over six years. I have heard stories from individuals who have lost their jobs, separated from their partners, lost money and homes as a result of gambling and have had their businesses which have gone into insolvency. 

Rose Matthews explained on East London Radio on Money Matters Radio podcast, that as a mother, she had to move from full time to part time work to help with bringing up her children and that as a result she had to survive on low income: 

'As my income reduced my expenses increased since I had to look after my family all alone. I have not recovered ever since. I was trapped on benefits.  As my children got older, the demand on me was even greater.  I relied on credit cards to make ends meet and support my children. I thought I could cope alone at first.   It was just got worse for me. I needed professional help.’

It maybe apparent that her circumstances have changed dramatically since she had signed the agreement with her original creditors.  In such a scenario should her creditors recover the contractual amount or take an ethical approach to her circumstances? 

When a creditor gets a licence to be a consumer credit lender with the FCA, it also accepts that consumers will be treated in a fair way when they recover the debt.  Creditors do have the civil courts to apply to for recovery of the the debt legally owed to them. The question for me is - should the creditor recover through the courts when it appears that the debtor does not have the means to pay?  

When the creditor has been notified by the debtor and/or his agents, the creditor must do the following under CONC 7.3.11: 

'A firm must suspend the active pursuit of recovery of a debt from a customer for a reasonable period where the customer informs the firm that a debt counsellor or 
another person acting on the customer's behalf or the customer is developing a repayment plan’.

Ms Matthews is yet to be notified of the outcome of her offer to her creditors as a result of my advice.  Liam Carlyle, Deputy Credit Control Manager of Lewisham Credit Union on the show explained that:

‘The creditor also has a duty to respond to the offer of the consumer within a reasonable period of time once an offer has been put forward and it cannot reject the offer without a good cause.’

Although, Ms Matthew's situation may have deteriorated for a number of years as a result of having a family, the Christmas period puts a lot of pressure on individuals such as Ms Matthews during the festive season. I am, no doubt, going to see an increase in the number of debtors seeking debt advice as consumers are now getting default notices from creditors from whom they borrowed to help finance the festive period.  

If you are struggling with paying your credit card debts, please seek debt advice from organisations such as Toynbee Hall.

Click on the link below to listen to the radio podcast: 

I am Ripon Ray, a qualified Debt Advisor.  This is my personal blog, all views are my own but the content is based on factual data available at the time of writing.

Wednesday, 24 January 2018

Non-British nationals face harsh penalty for non-payment of debts

If you are a non-British national, trying to ascertain your rights in the United Kingdom can be a difficult process, perhaps more so than if you are a British national.  In addition, your immigration status will also affect the support that you may receive from the Welfare State.  For example, non-payment of an unforeseen medical bill may have negative consequences for decisions relating to applications for British Citizenship.

Britain is currently negotiating an exit from the European Union as a direct result of the implementation of Article 50 of the Treaty of the European Union. Thus far European Economic Area (EEA) citizens have the right to settle in the UK if they have already lived in the country for five years. Many of the EEA nationals are, to a degree, entitled to welfare support so long as they meet a number of tests, including the draconian Habitual Residence test. Once the tests have been met, they are entitled to benefits on the same terms as if they were British citizens. 

In terms of the National Health Service, dental and optical care as well as prescriptions are all chargeable services for non-British Nationals. In-patient medical treatment is also chargeable and thus pre-existing health insurance is needed to cover medical costs.

I advised two clients who were unable to pay their debts - an Italian citizen and an Eritrean national. The Italian citizen explained to me that as he was riding his motor bike he was knocked over by a car. He was in a coma for over 6 days and broke his leg. He did not have European Union health insurance. After a few weeks of treatment, by the NHS, he received a bill to pay over £8000 for the period he was in hospital. With respect to the non-EU national, she gave birth to two children in an NHS hospital. She had no recourse to public funds. In both cases, after they were treated, the NHS sent them a bill with a warning that if they did not pay the debt within two months they would notify the Home Office.   According the UK immigration rules:

“The applicant may be refused on grounds of suitability if one or more relevant NHS bodies has notified the Secretary of State that the applicant has failed to pay charges in accordance with the relevant NHS regulations on charges to overseas visitors and the outstanding charges have a total value of at least £500.”

The EU national has been unable to pay towards the cost of the bill since his accident as he was working as a delivery man and can no longer do so. He is now dependent on means tested state benefit. In relation to the Eritrean national she is currently a housewife and mother and her husband works as a labourer. Thus for both there are concerns that they may not be able to successfully apply for British citizenship. 

On the Your Money Matters radio show on Betar Bangla, I invited Mr Nasif Shafiq to talk about his debt problem on air for the benefit of the Bengali community. He has no recourse to public funds because he resides in the UK on a spouse visa. He explained on the show how he got into debt. 

‘I left behind my mother, brothers and sisters in Bangladesh once I came to the UK to live with my wife. They were and are dependent on me when they need health treatment. The cost of medical treatment in Bangladesh is very high. They can’t afford to pay. I can’t ignore them when they need help to pay for their medical costs, I borrowed money.’ 

Keeping to the repayment was difficult financially and Mr Shafiq sought advice.

He had a Debt Management Plan in place with a commercial Debt Management company that charged for such a service. However, the company went into liquidation. He was very conscious that any legal proceedings against him by any of his creditors might cause problems with obtaining British citizenship. He thus wanted to carry on with the Debt Management Plan. After he sought advice from me, he set up a payment plan via Pay Plan, a free advice service, whereby he pays a reduced rate towards his arrears.

If you find yourself in debt or are having difficulties with managing your finances, either listen to my radio show on Betar Bangla or seek advice from your nearest advice centre such as Toynbee Hall. I doubt that you want to find yourself in a position where your right to reside in the UK is jeopardized because you are in debt.

I am Ripon Ray, a qualified Debt Advisor for the last 5 years.  This is my personal blog, all views are my own but the content is based on factual data available at the time of writing.