Lambeth Corporate Income and Debt Recovery Policy

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1 Lambeth Corporate Income and Debt Recovery Policy

2 This policy sets out the council s high level approach to: setting fees and charges income collection debt management payment services. The policy has been developed with reference to the Local Strategic Partnerships Sustainable Community Strategy, the council s FRESH values and the Lambeth Debt Collection Charter. In living the values the policy will embody: Fairness through robust equality impact assessments Respect for customers Excellence in value for money processes and ease of payment Service standards will be high Honesty through transparency on all aspects of income and expenditure 1. The aims of the policy Improve the efficiency of payments to local people, businesses and the council Improve income collection for the council 2. The council s commitments Set reasonable fees and charges which reflect its strategic priorities and outcomes Maximise income collection while reducing the cost of collection Write off uncollectible debt through appropriate decision making Make payments to customers by the most effective means Support indebted residents through signposting and referral to advice agencies within the borough 3. Setting fees and charges Lambeth Council is committed to setting reasonable fees and charges which reflect its strategic priorities and outcomes. The council s fees and charges are set out in Appendix J of this policy. Lambeth Corporate Income and Debt Recovery Policy.doc Page 2

3 4. Income collection Lambeth Council is committed to maximising income collection, through appropriate recovery methods. The council s recovery methods are set out in this policy. 5. Uncollectable debt Lambeth Council is committed to writing off uncollectable debt, subject to appropriate decision making. Please see the irrecoverable debt and bad debt provision elements of the policy. 7. Payment services Lambeth Council is committed to ensuring that all customers are paid promptly and by the most sustainable means. For example, Direct Debit and BACS will be the preferred method of payment over cash and cheque payments. Please see Appendix C for the council s Payment options strategy and policy. Lambeth Corporate Income and Debt Recovery Policy.doc Page 3

4 Lambeth Council Corporate Income and Debt Recovery Policy 2011/2012 Table of Contents 1. Introduction...7 Part 1 - Policy Introduction THE PURPOSE OF THE POLICY OBJECTIVES THE POLICIES AIMS CUSTOMER CONTACT WHAT THE POLICY COVERS METHODS OF PAYMENT...15 Part 2 - Policy Scope ACCESS, ADVICE AND SUPPORT ASSESSING ABILITY TO PAY INFORMATION USE OF OTHER AGENCIES SERVICE CHARGES HOUSING BENEFIT OVERPAYMENT VISITING CUSTOMERS IRRECOVERABLE DEBTS BAD DEBT PROVISION CREDITS CREDIT MEMO COMPLAINTS POLICY REVIEW AND MONITORING...27 Part 3 - Operating Policy THE POLICY IN OPERATION WE WILL TAKE PRACTICAL STEPS TO: WHAT SERVICES WILL CUSTOMERS RECEIVE WHAT SERVICE WILL CUSTOMERS WITH MULTIPLE DEBTS RECEIVE? PARTNERSHIP DEBT AND SERVICE LEVEL AGREEMENTS...30 Appendix A - Priority Debt...32 Appendix B - Scheme of Delegation and Financial Regulations...34 Appendix C Payment Options Strategy and Policy...36 Appendix D - Request for Financial information...40 Lambeth Corporate Income and Debt Recovery Policy.doc Page 4

5 Appendix E - Vulnerable Persons Policy...43 Introduction...43 Vulnerable adult definition...44 Identification...45 When to apply the vulnerable person message codes...46 What to do when a person is considered vulnerable...46 Debt management...47 Advice centres in Lambeth...47 Operational matters - Questions to ask...48 ACADEMY...49 Home visits...50 Appendix F - Hardship Relief for NNDR Payers...52 HARDSHIP RELIEF FOR NNDR PAYERS...52 Background...52 RULES TO BE ADOPTED FOR THE CONSIDERATION OF HARDSHIP CASES...53 CRITERIA...54 Hardship Relief for NNDR Payers INTRODUCTION WHAT TO DO WITH CLAIMS IDENTIFIED FROM SENDING OUT DHP FORMS DHP APPEALS...56 Appendix G - London Borough of Lambeth Financial Shared Services & Partners Service Level Agreement INTRODUCTION Overview THE AGREEMENT Statement of Intent Partnership Principles FINANCIAL SHARED SERVICES Service Offering Activity by Service Line Hours of Operation PARTNERS ACCOUNTS PAYABLE TEAMS...59 Appendix H - Protocol for Payment of Business Rates and Council Tax for Council Owned Property...59 INTRODUCTION:...59 Lambeth Corporate Income and Debt Recovery Policy.doc Page 5

6 Appendix I - Sundry Debtors Scale of Charges & Fees...61 Lambeth Corporate Income and Debt Recovery Policy.doc Page 6

7 1. Introduction For Lambeth Council, responsible financial management is critical to enabling the delivery of over 600 services efficiently, effectively and sustainably. Lambeth Council s Corporate income and debt policy focuses on two essential elements of sound financial management, income collection and debt management. The driving principle behind the policy is to maximise income collection by the most fair and effective means. The council s first Corporate income and debt policy spans all aspects of the council s income and debt activity. The policy sets out the principles that the council and its partners will use in setting and collecting all charges, as well as the standards that will universally be applied when dealing with our customers. In approaching corporate income and debt recovery at a corporate level we will be able to analyse trends across service areas and inform the council if our customers need further financial support. For example, as changes in the disability living allowance are enacted the council will be able to analyse if there is a significant increase in disabled people in debt to the council, similarly we will be able to analyse if there are changes in the amount of people not in debt as a result of the welfare reforms. The council Endeavour s to collect all monies owed, at the same time, our recovery procedures will be sensitive to individual circumstances. In particular, we will: set out our charges clearly be fair and consistent in dealing with all our customers seek to prevent enforcement by offering accessible payment options, advice and assistance at an early stage where necessary, ensure that action taken at the later stages of the recovery process is proportionate and that appropriate advice is provided. Lambeth Corporate Income and Debt Recovery Policy.doc Page 7

8 This policy will be reviewed annually to ensure that it meets the needs of the council, its partners, businesses and residents. Lambeth Corporate Income and Debt Recovery Policy.doc Page 8

9 Council income targets As part of the council s annual service and financial planning process, all income streams, collection rates and the associated bad debt provision are reviewed. Table 2.1 below illustrates the 2011/12 collection targets. Performance against these targets is managed by the respective departments (for example, council tax collection by Finance and Resources and parking income by Housing, Regeneration and Environment). Table 2.1 Council income targets 2011/12 Income stream 2011/12 debt raised 2011/12 collection target Council tax 100M 95.1% NNDR 117M 98.75% HB overpayments 7M 67% Sundry Debt 60M (2010/11) 94% Parking PCNs 16M 65% Rent 136M Incl. all tenant income In year collection: 100.8% BV66a: 95.39% Total former arrears 7.2M Section M No collection target Council tax arrears 40M To reduce balance by 2.1M Temporary accommodation 14.5M 98% Lambeth Corporate Income and Debt Recovery Policy.doc Page 9

10 The executive ownership for income collection is held by the Senior Leadership Board (SLB) and is devolved across the council as outlined in Diagram 2.1. The policy will be monitored annually by RBCS DMT Diagram 2.1 Income collection responsibility Council Finances Housing Revenue Account General Fund HRE Council Rent Leaseholder Service Charge F&R Council Tax Benefit Overpayments NNDR Sundry debt (FSS) HRE Parking Permits Parking Penalties Section 20 Not all departments are listed in Diagram 2.1, this is due to all sundry debt income collection being centralised to the Finance Shared Services in Finance and Resources, who collect debt on the department s behalf. The council also commissions a number of partners to collect income on its behalf, these are: Capita Council Tax and NNDR NCP Penalty Charge Notices Lambeth Living Rents, Section 20, Leaseholders United Residents Housing Rents Although the responsibility for income collection is devolved across the council there is a hybrid model in place for each of the main income streams bad debt provision, which includes budgeted amounts at a local level, as well as a corporately held bad debt provision. The reason for this is that each department has it s collection targets and therefore it s own bad debt Lambeth Corporate Income and Debt Recovery Policy.doc Page 10

11 provision A clear outcome for this policy is to, over time, reduce the requirement for the current levels of bad debt provision. This policy has been developed to help meet the council s corporate debt recovery priorities, particularly in respect of residents who have multiple debts across the council. The aim is to reduce amounts owed to the council whilst ensuring that residents are supported to address their debt and pay back any monies owed. In order to ensure that we are following best practice in achieving responsible debt collection, we have obtained feedback form external agencies such as the Lambeth Citizen Advice Bureau, local authority peers and internal teams, such as the Every Counts Campaign in Adults and Community Services. The policy is in three parts, covering: the aim and objectives of the policy scope of the policy the policy in operation The policy will be monitored monthly by Finance Strategy Board and subject to an annual review at SLB and RBCS DMT. Lambeth Corporate Income and Debt Recovery Policy.doc Page 11

12 Part 1 - Policy Introduction 1.1 The purpose of the policy Lambeth Council is required to collect monies from both its citizens and businesses for a variety of reasons. A high percentage of debt owed to the council comes from multiple debtors who owe council rent, council tax and housing benefit overpayments In undertaking this collection function it is inevitable that the council will be required to pursue the recovery of arrears from persons and / or businesses that may experience difficulty in paying such accounts. Therefore, an agreed policy of how the council manages and collects debts is key to ensure consistency and best practice in such situations This policy identifies where responsibility for collection of different debts lies, and sets out the principles and standards in relation to contact, recovery processes, repayments and benefit / money advice. Integral to the policy is the provision of support mechanisms and practices to all customers. It details the approach to collecting debt in Lambeth Council and also explains how the council can practical help, advice and support in the management of debt for our customers The policy sets the framework for a consistent and sensitive approach to collecting debt whilst at the same time ensuring that the council continues to maximise income collection. Lambeth has one of the highest levels of deprivation in London and we have created a holistic approach to debt recovery to take this into account In managing its income the council s over-riding priority must be to ensure that the amounts due to the council are collected in a consistent and efficient manner, and that Lambeth Corporate Income and Debt Recovery Policy.doc Page 12

13 there is no build up of arrears. To guarantee that this happens the council must, amongst other things, check that: there are agreed triggers in place to provide an opportunity for early intervention to reduce the likelihood of the arrears growing larger the debt is indeed due and is raised correctly and timeously the debtor is given a clearly itemised invoice setting out the charge, the basis of the charge, methods of payment and council contact details there is a clear recovery process which is understood and implemented fairly and consistently by the council and its partners appropriate advice and support is given where necessary This policy covers all debts owed to the council, including: council tax rents, both housing and others, e.g. garages and commercial benefit overpayments business rates sundry debts inc. residential and non-residential debts, unpaid fees and charges, etc legal costs penalty charge notices (parking contraventions) Section 20 including commercial waste and street traders Appendix A summarises the types and priority of debt covered by this policy. 1.2 Objectives This policy will apply to all council departments. The policy does not favour legal action over providing support to our customers, as each department needs to ensure that its regulations and recovery policies are followed It seeks to be fair but firm and the full range of collection and recovery methods will be used as appropriate if debts are not paid. The policy operates within the framework of relevant legislation (for example. on data protection, human rights, reasonable adjustments for accessibility) and best practice from our previous departmental income and debt recovery policies. Lambeth Corporate Income and Debt Recovery Policy.doc Page 13

14 1.3 The policy s aims The policy aims to: maximise income for the council, including rent income due to the housing rent account for council houses ensure that all council tax and rent payers interests are protected by striving to collect debts achieve an equitable share of income available to pay across all council and rent debts achieve efficiency savings by identifying solutions for customers on debt issues at the first point of contact be fair but firm be preventative, for example offering payment options (Appendix C) and other advice help, where possible, to maximise customer s income advise customers of reputable advice and support agencies (see Appendix F) ensure consistency in dealing with customers apply best practice in relation to debt collection Refer potential candidates to Every Pound Counts to ensure maximum welfare benefit entitlement is taken up. 1.4 Customer contact We will strive to improve contact with customers by: encouraging the customer to make early contact in respect of debt related matters using plain English in written letters and documents ensuring relevant legislation is followed promoting advice and support services providing communication assistance when needed e.g. translation / interpreting services for telephone, face-to-face or written communications providing one form that details all financial details sufficient for all departments debt to be considered with regards to priority debts. proactively contacting residents/customers when arrear triggers are reached to identify opportunities to provide support and reduce the likelihood residents getting into further debt. Lambeth Corporate Income and Debt Recovery Policy.doc Page 14

15 1.5 What the policy covers The policy covers the following: how customers and residents can access advice and support how ability to pay will be assessed once supporting documentation has been received how information may be shared how the council uses collection and other external agencies how we will conduct personal visits to debtors how we will deal with irrecoverable debts alongside our Debt write off policy (please see Appendix B) corporate approach for dealing with customer credits how customers can access the council s corporate complaints procedure. Details for each of these areas is covered in part two of this document 1.6 Methods of payment The council offers a range of accessible payment methods, including Direct Debit, standing orders, internet payments, cash and cheques.. The council s preferred method of payment is Direct Debit In addition, a number of electronic methods such as online payments via the council s website and mobile phone technology are available. Appendix C explains the different payment methods and how they might be more appropriate depending on the type of debt owed and individual circumstances. Lambeth Corporate Income and Debt Recovery Policy.doc Page 15

16 Part 2 - Policy Scope 2.1 Access, advice and support The council will advise individuals / businesses as to the range of discounts, relief and reductions available at both the time an account is issued and in subsequent communications. This information is also available on the council s website Staff in direct contact with customers will signpost them as to where they can obtain advice on benefits and debt matters appropriate to their needs We will ensure that all written communications use language appropriate to the intended recipient and that plain English is the standard wherever possible. We will explain complex terminology when it is required to be used by law. All documents will be issued in a timely manner, in accordance with any statutory timescales. The legal options open to the council in collecting debts and the customer in paying debts will be explained, taking into account the stage of recovery achieved We will assist people with language and communication difficulties, by offering translation, interpreting and other services when required. This will be actioned through staff following the council s translation and interpretation policy and procedure. 2.2 Assessing ability to pay In pursuing debt recovery, the council will act in accordance with statutory regulations and guidance. It s imperative that the council s approach to debt recovery is responsible and responds to the financial and social vulnerability of residents. It is also important that any Lambeth Corporate Income and Debt Recovery Policy.doc Page 16

17 assessment to pay is attuned to the possibility that customers may have illegal money arrangements (such as loan sharks and doorstep lenders) The council will be flexible in its expectations by taking into account the individual s circumstances and the financial climate that we are operating in In terms of efficacy, experience shows that as a general rule, collection is maximised by pursuing debts on an individual basis in a timely manner. Different recovery legislation in relation to council tax, housing rents, sundry income etc, tends to support this approach Where it is apparent that a customer is unable to pay an account/s, then the aim will be to agree an arrangement to pay (where appropriate), which takes into consideration the specific circumstances of the customer A customer s ability to pay will be based on their disposable income in proportion to the level of debt, the extent of debts owed to the council and that council tax and rent arrears are equal priority debts. The initial intention of arrangements to pay will be to clear the debt(s) as soon as possible. As a rule of thumb, the minimum position is that any debt should not increase. Pre-charge registration Penalty Charge Notices (parking contraventions) on their own are excluded from the arrangement process In practice this means ensuring that the current or most recent account is cleared, whilst making the maximum contribution to clearing other debts. Staff will always seek to make realistic arrangements to clear outstanding amounts by regular payments, in preference to taking legal action for recovery. Any arrangement agreed will be monitored on a monthly or weekly basis, depending on the payment terms of such arrangement A financial statement and supporting documents may be required to support a request for an arrangement. This will be a list of the customers household income and expenditure A financial statement can be completed with the help of an independent agency such as the Citizens Advice Bureau or online (see Appendix D). Lambeth Corporate Income and Debt Recovery Policy.doc Page 17

18 2.2.9 Persons in single and multiple arrears will be offered the opportunity of independent debt advice. Lambeth Corporate Income and Debt Recovery Policy.doc Page 18

19 2.3 Information Provision of information: In addition to detailing the amount payable and a description of the charge, the council will include the following information on all accounts: (a) the payment options available (b) a contact number for queries in relation to the accuracy of the account (c) a contact number for discussing payment arrangements where the customer has difficulty in paying the amount requested on the account (excludes Parking Penalty Charge Notices) Wherever possible the contact number in (b) and (c) will be the same Where it is necessary to issue recovery documentation (e.g. a reminder or summons) following non-payment of an initial account, or because an instalment arrangement has not been adhered to, then the council will include the information detailed above on such communications Inline with the council s translation and interpretation policy and procedure, we will provide information to meet specific communication needs. Arrangements will be put in place to use accredited language translators / interpreters to assist persons who have difficulties communicating in English, or British Sign Language (BSL) interpreters for those who have hearing impairments In meeting individual needs the council will, where practical, ensure that individual preferences are documented so that ongoing and future correspondence can be delivered in the preferred format, whilst still adhering to any relevant legislation. Lambeth Corporate Income and Debt Recovery Policy.doc Page 19

20 Sharing of information: The council will ensure that all computer systems used to bill and recover monies satisfy statutory requirements and offer the full range of recovery options to be pursued and are audited regularly Staff involved in the collection and recovery of accounts will be given appropriate training in: processes for collecting debt and income recovery the use of all applicable computer systems interacting and supporting vulnerable people the translation and interpretation procedure Subject to any limitations imposed by the Data Protection Act (1998) and the Human Rights Act (1998), access to debtors information contained on different systems will be made available to key staff in order that an individual s full indebtedness can be established and properly dealt with In order to be successful and ensure consistency, it is necessary to establish good working practices across council departments, statutory and voluntary agencies and all service providers when dealing with debtors. 2.4 Use of other agencies Lambeth Council, on successfully taking court action against a debtor, is empowered to enforce payment through a number of statutory remedies, including powers which impact on a person s possessions or liberty e.g. the right to seize goods, to evict a tenant, to request imprisonment, apply for a Charging Order etc, and will apply the most appropriate remedy One of the remedies is Levy of Distress, which Lambeth Council exercises through the use of external bailiff agencies To ensure effective, consistent and appropriate application of the Levy of Distress, Lambeth Council s appointment of bailiff services is through contractual agreement, including a detailed code of conduct which the bailiffs must follow. This can be found on Lambeth Corporate Income and Debt Recovery Policy.doc Page 20

21 the Department of Constitutional Affairs website at: Bailiff costs are also monitored by the Revenues client team on a monthly basis The council will ensure that these more 'severe' powers, for example removal of goods, will only be used when all other reasonable methods have failed and where all appropriate internal and statutory processes have been properly followed In the case of sundry debtors, unpaid accounts will be referred to our contracted solicitors who will seek judgement in the County Court, and apply the appropriate remedy to recover the debt. The options available include Attachment of Earnings, Charges on Property or referral to a High Court Enforcement Officer Debts relating to Adult and Community Services (ACS) residential care clients may be subject to Charges on Property under the Health & Social Services and Social Security Adjudications Act 1983 or under the Deferred Payments Scheme Charging orders are another form of recovery that will be considered when pursing debt and if it is considered the best way to secure the debt for the council it will be used The use of charging orders is also closely linked to the vulnerable person policy (Appendix E), which identifies cases where it is considered that the debtor is vulnerable and so a charge on the property is the best way for the council to secure the debt Charging Orders in the Adults and Community Services (ACS) department fall into two categories: a) HASSASSA Charge s.22 of the Health & Social Services and Social Security Adjudications Act 1983 gives a local authority the power to obtain a charge over a person s interest in land and can be exercised against those persons who avail themselves of accommodation provided by the local authority under Part III of the National Assistance Act i.e. Residential Care. The charge is therefore one, which will be obtained by the local authority where the person has fallen into arrears of their accommodation charges. b) Deferred Charge s.55 of the Health and Social Act 2001 deals with a local authorities power to take charges on land instead of contributions. A deferred payment arrangement Lambeth Corporate Income and Debt Recovery Policy.doc Page 21

22 is an agreement by which the local authority agrees to defer payment for Part 3 accommodation for a specified period. In exchange the resident grants the authority a charge over land. A charge created under s.55 is different to the HASSASSA charge because the resident must expressly grant the charge Charging Orders for other services can fall into a third category: c) Ordinary Charging Orders (including the use for Council Tax) This is where judgment has already been entered (such as obtaining a liability order for non payment of Council Tax) and the debt is secured against property by way of a Charge. If the debt remains unpaid, further enforcement is actioned and an Order for Sale can be granted by the court. This course of action is only taken as a last resort and approval would be obtained from the relevant Head of Service Guidance will be sought in all cases from our contracted solicitors. At this late stage of the recovery process substantial costs may be incurred (see Appendix J). 2.5 Penalty Charge Notices (parking contraventions) Penalty Charge Notices, pre-county court charge registration, are excluded from this policy's arrangement process. Only post charge registration cases may be considered in any arrangement process, providing severe financial hardship is identified as a result of the parking debt adding to other council debts. Such consideration would normally be through partner advice agencies or the multiple debt referral process Penalty Charge Notices which have accrued due to non-payment or multiple tickets, but which do not contribute to other council debts are not included in this policy. However, in cases of financial hardship it may be possible to offer arrangements to discharge the debt over a period of six months or less. Parking Service s must be contacted directly to arrange this. Lambeth Corporate Income and Debt Recovery Policy.doc Page 22

23 2.6 Service charges Leaseholders are obliged under the terms of their lease agreements to pay their service charges monthly in advance by the first day of each month In March each year, Home Ownership Services send details of the new estimated annual service charge for the new financial year to each account holder. Our financial year runs from 1 April to 31 March. Ground rent is added to the account on the 1 April each year and is payable in full at this time. Usually the new annual estimate results in an increase of the monthly service charge. We ask each account holder to adjust their monthly payment so that the new payment reaches the service charge account by the 1 April. To ensure that this runs more smoothly a standing order form is sent with the covering letter Ground rent is charged to leasehold properties only and is due for payment on the 1 April each year At the end of the financial year, we prepare our final accounts to show what we have actually spent in the previous year. Generally about six months after the end of the financial year Home Ownership Services apply the final accounts to each service charge account. If the estimated charge was too low we make an adjustment adding the difference to the service charge account. If the estimated charge was too high we make a credit adjustment of the difference to the service charge account For account holders whose account was in arrears before applying the final account, the council should continue with the arrears action. The situation may have become worse due to adding a debit adjustment to the account because of the final account. 2.7 Housing benefit overpayment An overpayment of housing benefit (HB) is any amount which has been paid but to which there was no entitlement. This includes any amount of rent rebate or rent allowance paid in excess of entitlement, rent allowance paid on account, which is in excess of entitlement and rent rebate credited to a rent account in advance of entitlement. Lambeth Corporate Income and Debt Recovery Policy.doc Page 23

24 2.7.2 Most overpayments are recoverable, regardless of the cause of the overpayment. The only exceptions to this are certain official errors. Any recoverable overpayment may be recovered at the council s discretion. If you establish an overpayment is recoverable, it does not mean you must recover it. The decision that an overpayment is recoverable must be separate from the decision to recover it. Due regard should be given to the circumstances relating to individual cases, when deciding whether or not recovery is appropriate The decision of who to recover from differs depending on which regulations were in force at the time of the overpayment decision. The regulations were amended with effect from 10 April Visiting customers The council, or contracted external debt recovery and enforcement agents, may undertake visits to persons or businesses in arrears in order to resolve accounts outstanding All staff or third parties making such visits will act in accordance with an agreed code of conduct The council will make every effort where possible to co-ordinate visits to debtors so that where appropriate, different debts owed by the same individual or business can be addressed at the same time, including liaison with HMCS. 2.9 Irrecoverable debts The council recognises that not all debts are collectable and therefore it will be appropriate in certain circumstances to classify debts as irrecoverable, where predetermined criteria are met (see Appendix B) The council will ensure that there are guidelines and policies in place which detail the action to be taken prior to an account being written-off. Lambeth Corporate Income and Debt Recovery Policy.doc Page 24

25 2.10 Bad debt provision A bad debt is an outstanding sum of money owed to Lambeth Council that has not been paid, despite repeated efforts to collect the debt. All recovery avenues must be exhausted before a debt is classified as uncollectible. The provision is the total of all the accounts where it is unlikely that we will recover the debt When it is established that the debt is irrecoverable or uneconomic to pursue further, the debt will be recommended for write off. Where the client is deceased and there is no estate for the council to pursue for monies owed to the council, the debt will be recommended for write off However, even where we have written off debts as irrecoverable, Lambeth Council will reinstate debts and attempt to collect them if new information becomes available, for example, if we manage to get a current address for a debtor whose whereabouts were previously unknown The Divisional Director s of Services together will approve write-off of bad debts (see Appendix B for authorisation details). With that authorisation, the debt can then be written off against the provision for bad debt that had been built up over time When debt is written off we will signpost the customer to advice agencies and other relevant support in an effort to ensure that they do not find themselves in a similar position again Credits Lambeth Council will develop a corporate approach to refunding credits, in that where ever possible, checks will be made for other outstanding debts to the customer, prior to a refund being made Where other debts are identified, it may be necessary to obtain the customer s permission, prior to a credit transfer. Other credit refunds, for example compulsory purchase compensation and home loss payments, are included in this policy s approach. Lambeth Corporate Income and Debt Recovery Policy.doc Page 25

26 All departments must strive to reduce then cease all cheque refunds by 1 April 2012 (refund applications will need to be amended to reflect this) Credit memos Where an invoice has been set up for a verifiable service according to standing procedures and on the basis that all avenues for recovery have been exhausted, then the debt will be written off against the bad debt provision on the balance sheet However, if the debt has been raised erroneously, it is not appropriate that the debt is written off a credit memo must be raised so that the cost is charged back to the business unit. Where it identifies cases where this applies, the FSS credit and collections team will inform the business unit manager that a credit memo is required instead of a write-off request. If there is no response by way of back up documentation within 21 days, then the FSS credit and collections team will seek authorisation from the Divisional Director of Revenues Benefits & Customer Services to raise the necessary credit memo instead of the write-off Complaints The council will endeavour to resolve problems in relation to debt collection at an early stage, in an informal manner Where this is not possible, debtors will be advised of the corporate complaints procedure, should they wish to take the matter further. What procedures will be used? Lambeth Council will develop a consistent first contact procedure in respect of information given to customers making a debt enquiry. All customers will be informed of the options available to manage their debt(s) and of the relevant service providers who may be able to offer assistance The structures, points of contact, interdependencies, communication and information sharing protocols will be developed and shared with service providers and customers. Lambeth Corporate Income and Debt Recovery Policy.doc Page 26

27 2.14 Policy review and monitoring The policy and its effectiveness will be monitored. This will be carried out by the RBCS DMT which will meet quarterly to discuss any problems and issues that have resulted from the policy The policy will be reviewed annually by the Strategic Leadership Board. This will enable it to be updated where necessary and take account of changes in legislation New approaches and ways of working will inevitably be introduced and this policy will need to be adapted to take these into account. Lambeth Corporate Income and Debt Recovery Policy.doc Page 27

28 Part 3 - The policy in operation 3.1 We will take practical steps to: raise awareness of debt with customers identify how much / how it has occurred raise awareness of the implications of non-payment. For those who can pay, the council will: provide information on how to pay by advising on methods, payment frequencies and at which locations people can pay (see Appendix C) encourage automated payment methods wherever possible, Direct Debit being the most cost efficient option make arrangements for the payment of accounts outside of traditional office hours and through the internet and touchtone technology, 24 hours a day, seven days a week wherever practical, request payments in advance so as to maximise cash flow and to minimise the necessity to issue accounts requiring collection, which in turn will minimise the opportunities for debt to arise make available the use of online billing and electronic forms undertake credit checks for the provision of some services. For those who can not pay, the council will: advise what happens if debts are not paid inform who can give help / advice (see Appendix F) encourage people to get help from a range of sources make referrals to appropriate agencies consider writing off all or part of the debt (see Appendix B). Lambeth Corporate Income and Debt Recovery Policy.doc Page 28

29 Our approach will be: A supportive approach to debt recovery with a pro-active referral process where possible. We will deliver a service which meets the needs of each individual and signpost to other support agencies. Whilst the council will ensure that arrears are pursued in a timely manner, it does recognise that certain individuals will require more sympathetic and sensitive treatment, for example in the case of recent bereavement, major illness or where the customer requires special assistance in handling their financial affairs. In the case of a vulnerable person refer to the Vulnerable person policy (see Appendix E). Consideration may be given in certain cases of hardship for the customer s debt to be remitted (see Appendix F). 3.2 Services customers will receive In determining how customers can best be supported and encouraged to address debt issues, it is important that service provision at the first point of contact is delivered in a sensitive way, to: establish the overall aims of the council in placing the customer at the heart of all we do; with focus on external customers set out a specific direction for the development of customer access channels, regardless of department or service provide a framework for customer service improvement, based upon clear and agreed principles Once a customer has made contact it is imperative that they are referred on to the most appropriate source of debt management support On initial contact with Lambeth Council, customers will be informed of the options available to manage their debt(s) and of the relevant service provider. Where appropriate, customers will be informed of debt advice and support services available to them outside the council Customers presenting with a single debt to the council will be able to make a payment or where the debt cannot be cleared, a realistic agreement to pay via the first point of Lambeth Corporate Income and Debt Recovery Policy.doc Page 29

30 contact by the relevant council department. This is due to recovery and enforcement regulations differing prior to action being taken. 3.3 What service will customers with multiple debts receive? It is important that officers know the full extent of the customer s debt when arranging payment plans and referrals. Customers presenting with multiple debts should be actively encouraged to share with staff, information on all monies owed This policy does not promote a one size fits all approach, but rather looks to work with the customer to take agreed steps to help address multiple debts To this end, the response to debt management will vary as different solutions will be needed to address the far ranging complexity of cases The provision of individual responses will also take into account diversity and exclusion issues Support will be offered, including access to interpreters for customers whose first language is not English or for those who are deaf, ensuring staff attending appointments are able to address the individual customer s needs. Where requested the provision of supporting information for customers will be made available in an appropriate format, e.g. large print, Braille or audio Where practical, we will also require our partners and suppliers of services to ensure the same level of service is provided and encourage other agencies to mirror our approach to diversity and inclusion issues. 3.4 Partnership debt and service level agreements Lambeth Council has a number of partners that are regularly invoiced for services provided. These include Lambeth Living, Primary Care Trusts, central government departments, public utilities and other local authorities. Lambeth Corporate Income and Debt Recovery Policy.doc Page 30

31 3.4.2 A number of our partners are also suppliers of services to Lambeth and this forms an ideal opportunity for a service level agreement to be made to formally manage receipts and payments respectively The service level agreement should ensure that the supplier receives payment on time and Lambeth will expect a reciprocal arrangement with monies due to the authority The service level agreement is attached at Appendix H. A protocol for the internal collection of business rates is also included at Appendix I. Lambeth Corporate Income and Debt Recovery Policy.doc Page 31

32 Appendix A - Priority Debt Priority debt There are many types of debt, but those considered as priority debts are those debts owed to creditors who can take the strongest legal action against an individual who does not pay. It is not the value of a debt that makes it priority but what creditors can do to recover their money. The procedures supporting this policy would ensure customer awareness of what priority debts are. The policy identified the following as equal priority debts: Rent arrears as it can result in eviction Council tax as it can result in bailiff action, attachment of earnings / benefits, bankruptcy or imprisonment Business rates as it can result in bailiff action, bankruptcy or imprisonment Housing benefit overpayments as it can result in County Court Action Sundry debt as it can result in County Court action and a High Court Enforcement Officer Service charges as it can result in repossession Other priority debts Fuel debts as they can result in disconnection Income Tax and VAT as they can result in bankruptcy or imprisonment County Court Judgements - can result in bailiff action, Attachment of Earnings or bankruptcy Fines or compensation / costs orders as they can result in imprisonment Maintenance / child support as it can result in repossession of goods or even imprisonment Hire purchase will be considered essential if, for example it is for the purchase of a car needed to get the owner to work. Water rates as it can result in bailiff action / disconnection Maintenance or child support as it can result in bailiff action or imprisonment Lambeth Corporate Income and Debt Recovery Policy.doc Page 32

33 Penalty Charge Notices (parking contraventions)- can result in bailiff actions and the vehicle impounded Mortgage arrears The following are considered non-priority debts credit/store cards unsecured personal loans bank overdrafts credit / interest free / hire purchase agreements catalogue debts money borrowed from family and friends. Lambeth Corporate Income and Debt Recovery Policy.doc Page 33

34 Appendix B - Scheme of Delegation and Financial Regulations Part 3 - Section 4 Scheme of delegation and financial regulations Introduction The Constitution of the London Borough of Lambeth sets out how the council operates, how decisions are made and the procedures followed to ensure that these decisions are efficient, transparent and accountable to local people. The Constitution is made up of 16 Articles with detailed procedures and codes of practice included in supporting rules and protocols. The council has a statutory duty under s151 of the Local Government Act 1972 to make arrangements for the proper administration of (our) financial affairs and secure that one of (our) officers has responsibility for the administration of those affairs. Accordingly, the Scheme of Delegation Part 3, Section 4 Part A provides information and guidance to council officers and others on the various levels of delegated authorities that are exercised by the council in carrying out its statutory functions. They are to be read in conjunction with such other council wide procedures and related documentation as may be necessary and particular attention should be made to any financial requirements that are mentioned. The Scheme of Delegation consists of three distinct categories: (a) the Introduction; (b) the Corporate Scheme of Delegation, which applies to the Chief Executive and all Executive Directors; and (c) additional powers which have been delegated individually to the Chief Executive and each Executive Director. Financial Regulations Part 3, Section 4 Part B form a fundamental part of the working of the council and can be found following the Scheme of Delegation. 7 May 2008 Lambeth Corporate Income and Debt Recovery Policy.doc Page 34

35 CORPORATE SCHEME OF DELEGATION 16. All officers making decisions under delegated powers are required to keep a register of all such decisions. Debt write-offs 36. Authority to write off debts is delegated to officers in accordance with the following scheme: Value of debt Over 100,000 More than 10,000 up to and including 100,000 Up to and including 10,000 Authorising Officer Executive Director and the Executive Director of Finance and Resources Executive Director and Divisional Director of Resources Divisional Director and Divisional Director of Resources Lambeth Corporate Income and Debt Recovery Policy.doc Page 35

36 Appendix C Payment Options Strategy and Policy 1.1 In the year 2009/2010 year, the council processed approximately 1.2m payment transactions with a total value of 294m, as follows: Service Value (,000s) Value % Volume Volume% Council Tax 104, , Housing Rents 71, , Business Rates 67, , Sundry Debt 57, , Commercial Waste 1, Housing Benefit 1, , Overpayments Highways Parking , Housing Parking , House Purchase ,354 1,170, In view of the volume of transactions and the need to safeguard services for residents, the council has recently re-assessed its methods of payment in order to inform a strategy for the future. 2 Objectives 2.1 The strategy has four objectives, as follows: 1. Revenue collection Payment methods should encourage the individual or organisation to pay promptly or require payment to a pre-determined timetable. 2. Value for money Minimising the cost of processing each payment. Reducing the need for staff to intervene in the process. Lambeth Corporate Income and Debt Recovery Policy.doc Page 36

37 3. System integration Ensure that, where possible, payments are processed through the Council s own systems or there is an automatic upload to those systems. Reduce the number of steps staff must take to process each payment. Simplify the options for the customer to make payments. 4. Convenience and choice Ensure that the payment methods available serve the needs of the customer while reducing the cost to the council. 3. Current payment methods cash 3.2 The council maintains a cashier office at Olive Morris House. Cash is the traditional payment method requiring face-to-face contact with a cashier either at the council s cashiers or a bank. This method is, however, quite labour-intensive and expensive to operate. Queues at busy times may not suit all customers. 3.3 The council is introducing new, secure and efficient methods of payment, and it is anticipated that over time the use of cash would decline and cease to be a major method of payment. Cheque / Postal Order 3.4 This is normally used for large transactions and payments made by post. However, customers should be aware that, following a review by the UK Payments Council, cheques could be phased out by the year As with cash above the council is introducing a number of new payment methods which residents should find to be secure and convenient. Direct debit 3.5 The council promotes direct debit as its preferred payment method. This is an automated transaction initiated by the council to a fixed timetable. The customer Lambeth Corporate Income and Debt Recovery Policy.doc Page 37

38 completes a mandate authorising the council to request payment for the service from a nominated bank account. 3.6 Direct debit is the simplest and most convenient way for our customers to pay their bill, saving them time as their bills are paid automatically. Customers can choose when in the month the payment is made giving them greater control over their money. 3.7 Direct debit is the preferred payment method as there are benefits to both the customer and to the council. These benefits include: the cost of processing direct debit payments is lower than most other methods the direct debit is collected rather than the customer having to remember to make a payment the money is credited to the council s account the day of the debit so there are no delays Reduction in collection costs helps to keep additional charges down. Standing order 3.8 However the council also accepts standing orders as an alternative to direct debit where this is more convenient to the customer. A standing order is also an automated payment via the BACS system from the customer s bank. The customer completes an instruction to the bank to make payments of a given amount to a stated timetable. Paypoint 3.9 Paypoint has a wide network of agents and is convenient for customers, who can use any one of several payment methods. The council supplies the customer with a plastic card marked with a barcode and reference number. The customer then presents the card to a Paypoint agent when making a payment. Online payments and internet banking / telephone banking 3.10 The Lambeth Council website has a pay online link on its homepage, which takes the citizen to a page listing the funds that can be paid online ( ). Once the relevant fund is selected, the customer Lambeth Corporate Income and Debt Recovery Policy.doc Page 38

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