Weekly Blog by Philip King, CEO of the ICM - 'The changing 'Face' of Debt Guidance'

Since mentioning the publication of the new OFT Debt Collection Guidance in my blog last week, I've now had chance to look through it in detail. No great surprises; it's very similar to the draft on which we were consulted some time ago and says what I guess we'd all largely expect it to say. It is, after all, only an update of the version of the document issued in June 2003.

The aspect that seems to have caused the greatest debate on the ICM Credit Community LinkedIn group, and elsewhere, is the OFT warning to debt collectors not to use social networking sites such as Twitter and Facebook to pursue people who owe them money. I don't want to be pedantic here but I'm not sure that's exactly what it says. Actually what it says is that unfair or improper practice would include 'acting in a way likely to be publicly embarrassing to the debtor...' which includes, as one of the examples quoted 'posting messages on social networking sites in a way that might potentially reveal that an identifiable person is being pursued for the repayment of a debt'. That's a long way from banning the use of Facebook!

I might be showing my age here but I remember lecturing ICM evening classes at Watford College in the 1980's and recall teaching about s40 of the Administration of Justice Act 1970 which addressed the unlawful harassment of debtors and included the works: 'A person commits an offence if, with the object of coercing another person to pay money claimed from the other as a debt due under a contract, he harasses the other with demands for payment which, in respect of their frequency, or the manner or occasion of making any such demand, or of any threat or publicity by which any demand is accompanied, are calculated to subject him or members of his family or household to alarm, distress or humiliation'.

So nothing has changed really; in those days, the example of harassment was parking a van outside someone's house with the words 'debt collector' written on the side. Surely all we're talking about here is the 2011 equivalent? There's nothing wrong with using social networking tools to find people or to learn more about them but harassing people by any means is - and must be - unacceptable. Those who have seen me present using a baseball bat as a visual aid will know that such a bat is an equally unacceptable collection tool!

I am intrigued by the following words in the Foreword: 'This guidance document is not intended to provide a basis for debtors to avoid the repayment of debts duly owed. We consider that debtors should take responsibility for engaging appropriately in the debt recovery process...'. On the one hand, I am encouraged by its inclusion; on the other, the fact that they have to write these words at all makes me think that the document is weighted heavily in favour of debtors. We shouldn't lose sight of the fact that taking on debt carries with it an obligation to repay it, and that should always be the starting point.

The Guidance carries considerable detail and Consumer Credit licence holders would do well to read it and ensure they, and any third party organisations working for them, are complying with it.

Weekly Blog by Philip King, CEO of the ICM - 'Finding common cause...'

I said in my blog last week that I would be meeting a couple of MPs to discuss late payment. Since then, I've met with Debbie Abrahams, Labour MP for Oldham East and Saddleworth and Anne Marie Morris, Conservative MP for Newton Abbot. In addition, I attended the BIS Small Business Economic Forum chaired by Mark Prisk and have been talking to the BIS team about some future activity around late payment. I have also been starting to prepare for a presentation I'm giving to the AFDCC (the French equivalent of the ICM) in Paris next month about the new EU Late Payment Directive. It's fair to say that late payment has certainly been at the forefront of my mind in recent weeks!

Debbie Abrahams and Anne Marie Morris are both articulate and passionate about supporting small businesses and helping to protect them from the impact of late payment. Coming from different sides of the chamber, it is no surprise that their views on what can and should be done differ slightly but they certainly have common objectives. I was encouraged by the fact that both recognised the need for a change of culture across the whole business community, acknowledged that payment terms are part of the wider contractual and commercial negotiations between businesses, agreed that more emphasis should be placed on the positive aspects of prompt payment (see www.promptpaymentcode.org.uk), and endorsed the need for businesses to be educated in the basics of credit management that can help them to assist themselves.

There is work to be done and I will continue our dialogue, exploring various ideas and initiatives. This, together with the imminent BIS activity and the continuing demand for the ICM/BIS Managing Cashflow Guides (of which there have now been over a quarter of a million downloads), gives me grounds for optimism.

I'll return to the EU late payment directive on another occasion but, before then, I suspect I'll be addressing the new - and just published - OFT Debt Collection Guidance which I'll be reading in detail over the next day or three.

Weekly Blog by Philip King, CEO of the ICM - 'Merlin loses its sparkle'

Vince Cable has apparently, and allegedly, admitted that Project Merlin has failed. The Merlin agreement with the major banks guaranteed that lending to small businesses would increase to £76bn in 2011 but his acknowledgement that 'new mechanisms' would have to be considered is a tacit recognition that Merlin hasn't worked. The Chancellor's announcement last week of his 'credit easing' plan of a new credit line for business is further evidence.

As I said at the time, the idea that commercial banks could be 'forced' (as some commentators described it) to lend seemed farfetched at best. Commercial banks have a responsibility to ensure that their lending risks are justified and their lending policies are sound. We've all seen spectator examples in the press of where they may have got it wrong but receiving much less publicity are the numerous cases where they've declined to lend and have been right to do so.

I won't pretend to fully understand the concept of 'credit easing', the detail of which has yet to be made clear, but Phil Orford, the Chief executive of the Forum of Private Business asked three very sensible questions in a recent blog about a scheme which it would appear would require Treasury officials, or officials of an agency specifically appointed for the task, to have a start making judgments on lending taxpayers' money to private sector firms:

• How will they decide which companies deserve a loan from the taxpayer?


• How will the money be channeled to the businesses that need it?


• If these businesses are safe bets, why aren't private lenders already lending to them?

All will become clear in due course and I'll be fascinated to see exactly how it will work.

The other issue that needs to be addressed is how to encourage those business with outstanding debtors to use best practice in credit management to release that money and therefore reduce their external cash requirements. It might even save them having to look for working capital funding at all, but more of that next week by which time I'll have met with two MPs - one Conservative and one Labour - and discussed such matters.

Weekly Blog by Philip King, CEO of the ICM - 'Being proud to be a professional'

I was at the fifth CCRi Conference this week and what an excellent event it was. With more than 400 credit professionals gathered at the Guoman Tower Hotel in London, it proved a great opportunity to network with colleagues, and provided plenty of learning to take away. I shared a quote I'd seen the night before in my brief comments at the beginning of the day that 'Leadership and learning are indispensable to each other'. How true those words are. Standing still is not an option because, if we don't grow and develop, the world moves on and leaves us behind!

Trevor Williams, Chief Economist at Lloyds Bank ended his keynote speech by observing that the future is impossible to predict because there are 'so many imponderables'. If that's true, and I believe it is, then all the more reason why credit professionals must build their skills and knowledge so they can continue to add value to their businesses and help them survive and prosper. What might have worked well a year or two ago won't necessarily work now and, if we assume it will, we could get seriously caught out. The new ICM CPD scheme currently being piloted, ahead of its formal launch for 2012, is well timed, and so is the continuing progress of our learning and development programme. We're demonstrating our commitment to providing the tools to equip people and make them truly effective, and feedback from our members and potential members attending CCRi on Tuesday was universally positive.

Credit management is a profession in just the same way as accounting or law are professions, and those of us working in it must not be afraid to make that point to our colleagues, peers and bosses. Credit management sits at the centre of the business and touches every aspect of the organisation; now is the time for us to stand up, be counted and show pride in our professionalism.