Tagged: Newcastle Citizens Advice Bureau

Northumbrian Water among suppliers accused of Wonga tactics after sending out debt collection letters

A North East water supplier has stopped issuing “frightening” debt collection letters after its tactics were likened to controversial pay day loan company Wonga.

Northumbrian Water was found to be among half of UK suppliers sending correspondence which appears to be from an external debt agency, but is actually from the water company itself.

The news follows June’s ruling by the Financial Conduct Authority (FCA) that 45,000 Wonga customers must be compensated after being sent letters from nonexistent law firm threatening legal action, while similar practices were also highlighted among banks and energy firms.

Northumbrian Water, which stopped the policy earlier this year, used the name Alexander James in large print at the top of the letters, but say it was clearly linked to the company.

In total, 12 of the UK’s largest water suppliers have been found to have taken part in the practice – which water watchdog Ofwat has written to companies with concerns over – while five are still doing it.

Shona Alexander is chief executive of Newcastle Citizens Advice Bureau, which offers free debt advice.

She said:

It is good news Northumbrian Water has stopped using this letterhead and it is disappointing to hear some companies are still using it.

“It is bad practice. By saying Alexander James at the top it looks to the client as a debt collector and that is frightening. Then at the very bottom in small print it says this is part of Northumbrian Water.

“At best it is unfair and causes distress, and at worst it is deliberately misleading.”

A Northumbrian Water spokeswoman said:

“The Alexander James brand was used to encourage customers who were not paying their bill to contact us to talk about a payment plan and to receive debt advice. It was very clear that Alexander James was part of Northumbrian Water Limited.

“We took the precautionary decision to suspend using the brand name the day after the Wonga story broke. After researching why the FCA took action against Wonga, we believe we have complied with best practise as the brand name was registered with relevant financial agencies to ensure transparency and our consumer watchdog, the Consumer Council for Water, was also fully aware we were using this brand name.

“After a review we have now decided that we will not be using the Alexander James brand in the future although our use of it was transparent and compliant.”

Source –  Newcastle Evening Chronicle,  16 Oct 2014

Benefit sanctions drive Newcastle families to payday lenders

Families are being forced into taking payday loans to cope with benefit delays, a city advice group has warned.

Newcastle Citizens Advice Bureau says the region has seen a 206% increase in the number of Job Seeker’s Allowance cases in just one year after Government rules came in which see benefits stopped as punishment for not finding a job.

While ministers say they want to force people to take job hunting seriously, the bureau says the strict new regime is having a different impact.

Shona Alexander, chief executive of Newcastle CAB, said that the longer minimum sanction period – when people are left without the financial support of their benefit – is having a counter-productive effect.

Claimants are distracted from job hunting as they focus on putting food on the table and keeping a roof over their head.

She added: “We see people here every day who have had their benefits sanctioned and who are desperate for money.

“They are often forced into the hands of payday lenders, which only make things worse.

“Sanctions often have a negative effect on our clients’ mental health. Being sanctioned can actually put someone further away from the workplace.

“They’re so busy trying to put food on the table and worrying about debts that they can’t look for a job.

“Some people don’t even know when they’ve been sanctioned, so by the time the money stops there’s no time for emergency budgeting, challenging the sanction or applying for hardship payments.

“For the first week they’ll struggle to get by, scraping up every penny.

“The second week they might borrow from family or friends, but by the third week they are desperate, and that’s when they come to us.”

In the North East, around 13% of those seeking work have had their benefits docked as a punishment for mistakes such as turning down an interview.

The extra pressure and financial burden caused by sanctions means parents struggle to put food on the table, pushing people further into debt and impacting upon their health.

The Government has previously defended the move, with employment minister Esther McVey saying: “Sanctions are used as a deterrent. The vast, vast majority of people don’t get sanctions.

“When you get Job Seeker’s Allowance – there’s a clue there in the name, job seeker’s allowance – you are paid that to make sure you are doing all you can do to get a job.”

More than £7m is thought to have been spent on appeal tribunals.

Source – Newcastle Evening Chronicle  22 April 2014