Article: Bailiff legislation – what a waste of time

I’ve had my experiences with bailiffs in the past and know how difficult it can be.  Upon hearing of new legislative changes though, I got frustrated at what I see as being “mask” conversations.  Bailiffs, gay marriage and our relationship with the EU are not the priority right now.  So I wrote this piece for the Huffington Post.  Enjoy:

4 January 2010 is a day I won’t forget any time soon. On the first working day of the year, I stepped out of my house at 6am and walked straight into an unmarked white van. The van was on my drive and the front of it no more than 3 steps from my door. The man sitting in the car seemed tiny, until his 6ft 5in, 300 million stone frame squeezed out and, almost Ray Winstone-like, snarled “Mr Patel. I’m here to collect £1,850 on behalf of (insert name of big bad bank here)”.

Flattered though I was at the generalisation that someone of my frame could possibly be a Mr Patel, it was a case of mistaken identity. “He doesn’t live here anymore”, I explained. “I bought the house from him 7 years ago”. The bailiff was convinced that I looked like a Mr Patel, so I should stop trying to pull the wool over his eyes, arrange immediate payment or he’ll be noting down the details of my car he intended to take as payment of this debt. Early morning commuters who had to walk around this van and my distressed mother in the house made for a somewhat difficult hour.

So it is welcome news that aggressive bailiff practices will be subject to legislative changes from next year. Among the changes, bailiffs will be prevented from using any physical contact, cannot enter homes where only children are present or set their own fees. Indeed, it is not their arms that have a crippling impact on debtors, it is their “visit charges”. The enforcement industry has called these changes a “small step forward”.

However, the changes being suggested, on the whole, aren’t really new at all. Enforcement law is notoriously complex, with powers differing on the debt in question and the types of creditors using enforcement officers. There is already some legislation in place that details what bailiffs are able to do. The proposed changes are still very light on what the industry itself is after – stronger regulation and a consistent complaints procedure. Although, limiting powers on fee charges is a very important and necessary step.

But critically, in the week Britain faced up to the prospect of a triple-dip recession, this announcement feels like a further admission that current economic policies are failing. Essentially reminding people of their rights when dealing with bailiffs, it is implicitly suggested that more people are expected to fall on hard times.

According to the Bank of England, over £3.4bn of lending to individuals was written off in the second quarter of 2010 – the highest since 2007 to date. With defaults lasting six years on credit files, consumer credit markets – and subsequently consumer consumption – is on a long and slow journey to recovery.

The Council of Mortgage Lenders reported an 18% fall in loans for house purchases and remortgages from August to September 2012 and a further 14% fall in first-time lending over the same period. Persistently difficult borrowing conditions coupled with increasing food, energy and travel prices are further putting the pinch on consumer wallets.

This depresses markets. Consumers need better education about the impact of the last few years on their credit files, managing their bills more effectively and making their money go further. Funding cuts to Citizens Advice Bureaux across the country don’t help. Increased financial prudence may be an unintended consequence for the short and medium-term economy, but with interest rates remaining low, consumers may be more willing to spend.

Personal finance experts, like Martin Lewis, the founder of moneysavingexpert.com whose financial education in schools petition gathered over 100,000 signatures and has led to its place in school curriculums from 2014, should join forces with banks and credit rating agencies to make a similar effort by entering communities and educating consumers.

It is in the consumer’s interest to know their rights when faced with bailiffs. It is in the national interest to ensure consumers can limit their exposure to bailiffs in the first place. I thought it was the national interest that brought this coalition together in the first place?

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Blog: Personal finance lessons for UK PLC

My economics degree, career in finance and debt issues have taught me a few things:

  1. Economists have a tendency of overcomplicating pretty simple matters by slapping things onto a graph;
  2. Financiers, in the main, are finding out what works and what doesn’t by trial and error – they don’t control markets, the markets control them
  3. Speculation enslaves economies – credit rating agencies and market traders live by them.  They forget that markets have no memory
  4. Government budgets are pretty pointless “statements of aspiration” rather than anything concrete – it almost invariably leads to disappointment and has taken on an almost ceremonial quality

But perhaps the most important lesson I’ve learnt is that managing debt (like losing weight) is hard, it’s slow and, fundamentally, it’s easy.

With the Eurozone seemingly teetering at the precipice of economic oblivion and the government seemingly clueless about which to do first – cut or grow (Cameron today in a speech at the IoD said, “deficit reduction and growth…they are not alternatives.  Delivering the first, is absolutely vital in securing the second…we cannot blow the budget on more spending and more debt”) – perhaps the solution lies not in the corridors of academia or the glass walls of the City but somewhere much closer to home.

Open any personal finance/debt advice website and you’ll find the following bits of advice – UK PLC could do worse than to learn from them:

Check your credit file

There are a few critical questions you’ll need to address here:

  • Have you been the victim of identity theft – are creditors out there thinking you’re France?
  • Are there inconsistencies in your credit file – did you pay the Saudis or Big Scary Banks Ltd when you said you would?
  • Are you on the electoral roll? – are you still registered to determine affairs in foreign countries or registered to vote in your own?
Once you’ve had a good look, call Standard & Poor’s, Moody’s and Fitch ratings agencies to correct these errors.  But caution: credit ratings agencies don’t really know what they’re doing but get paid a lot to determine things that, frankly, they are inept at doing.  Nevertheless, it’s good to keep them sweet.

Budget for your critical payments first – mortgage, council tax etc.

  • Make sure you’re housed, fed, watered and breathing whilst paying for any associated costs.  Maybe UK PLC should make sure houses, food, water and…er…breathing…is readily available
  • If you’ve got contractual obligations to, I don’t know, unscrupulous governments anywhere else well…you’ve signed a contract.  Just make sure they’re paid – you don’t want a visit from bailiffs for this or run the risk of (re)possession
  • Avoid risk of default – no one wants to feel the wrath of the agencies even though you shouldn’t really be thinking about borrowing at all.

Budget for your minimum payments on non-critical debt – credit cards, loans, overdrafts

  • You owe money to Big Scary Banks Ltd so negotiate a minimum payment plan.  Oh and remember, Big Scary Banks Ltd also owe money to other Big Scary Banks Ltd.  You might default with them, but they’ll probably default with someone else. Either that or they’ll create sub-prime funerals and exotic derivatives to make sure they don’t.  Because that’s just what you do.
  • Keep your payment plan printed and on the wall in front of you for everyone to see.  They’ll support you if you know what you’re up to.

Streamline your spending

  • This isn’t the same as cutting.  This is about going on price comparison websites and making sure you’ve got the best deal. By all means, get rid of what you can do without (such as payments to the “Exclusive Golf Club memberships at the Across The Atlantic Club”), but try and get the best deal.
  • But remember this, because you ARE a government and not an individual, it’s just that little bit easier to make things cheaper for you by making it yourself.
  • Take your own lunch to work instead of buying it from Pret.  Or China.
  • Think of ways to pay out less money to people WHO ACTUALLY WANT TO EARN MONEY THEMSELVES! Young people.  The unemployed.  Able-bodied lazies.
  • See “Invest in Yourself” for some more ways to streamline your spending

Snowball your debts by tackling your most expensive ones first

  • This is great, and really easy to do.
  • Tackle your most expensive debts first with the extra money you “save” as a result of taking in your own lunch
  • For a moral victory, tackle the smallest debt first and give yourself a pat on the back.  Like not making life difficult for old people.  Or children with “special educational needs”

Commit to saving for a rainy day and find more ways to save more

  • Aim to save at least 3 months worth of income for a rainy day.  Don’t touch it.  Put in an ISA and watch it grow tax-free.  Or send it to Switzerland.
  • Set up a savings and investment club and call it “The United Kingdom”.  Get everyone who’s in the club to commit to saving and investing their savings too.  You’ll see everyone getting a little bit more responsible with their money.

Invest in yourself – it might be your only way to earn more

  • The above plan will keep you stable and cutting debt for a while
  • But of course, the more money you earn, the easier it becomes
  • You might have streamlined by taking your own lunch in, but how about building your own cars? Here’s what happens – you get people who you’re paying benefits to working and PAYING YOU TAXES (earning money) and what they create is bought by other people PAYING YOU VAT AND OTHER SUCH TAXES (earning money).
  • How about learning a new skill or undertaking a qualification? We know you’re loved up with service industries but the Chinese aren’t genetically different to us that makes them better with computers.  Or are they? Maybe they are…
  • Be healthy in mind and body too – don’t be afraid to start losing weight or taking up a new hobby.  It’ll help you tackle your debt problem and keep you in it for the long haul.  Weight loss could include less fixation with what the papers say (at parties) and your new hobby could be running government (instead of trying to run the economy).