As the shadow chancellor and trustee of two debt counseling charities, Chris Leslie spent years trying to protect vulnerable borrowers from the tactics that lenders use to reclaim loans.
How the tables have turned.
Sunday’s mail can show that the former Labor MP has advised bankers on how to get Covid emergency loans back in his new role – as head of the trade organization for the British army of debt collection agencies.
Switching sides: Former Labor MP Chris Leslie with Gordon Brown and Tony Blair in 2005
Speaking at a round table event hosted by the Chartered Banker Institute, Leslie said that loans of up to £ 50,000 should be repaid and not written off at taxpayers’ expense.
The round table event was called “How Can Banks Get Bounce Back Loans Back?” These were launched last year with 100 percent taxpayer support to provide small businesses with a vital lifeline through the pandemic. About £ 46.5 billion has been spent and there are fears that huge sums of money will never be paid back.
Leslie, who briefly served as Labour’s shadow chancellor in 2015 and was also the trustee of two charities (now StepChange and Money Charity) during the financial crisis, said: “We’re talking about 1.5 million companies. If they feel like a write-off is about to take place, the payments are simply suspended.
‘The UK system has already introduced a certain forbearance approach. It started with the option of a six year repayment period that was extended to a potential ten year period.
“There are already options for interest and payment holidays for six months, etc., when repayments cannot be made in a certain way. To what extent can the banking community have this harsh incentive or moral imperative to collect on behalf of the taxpayer? ”
He added, “It’s a really hot potato. It’s going to take a lot of sensitive movement.
“To be honest, the public sector doesn’t always have the best reputation for being sensitive about debt management.”
His comments have emerged as the first wave of interest payments on Covid emergency loans this week.
Sunday’s mail revealed two weeks ago that the largest lenders had started sending letters to thousands of customers warning them that interest payments were imminent.
Banks are spending millions on debt collection because they fear that they will be forced to use persistent tactics to avoid turning to taxpayers to make up for losses.
Leslie, who became executive director of the Credit Services Association last August, has been defending the debt collection industry for nearly a decade after criticizing lenders for ripping off customers.
In 2012, Leslie said the Financial Conduct Authority “must take action against high-priced payday lenders who are exploiting some of the poorest.”
As a MP for Nottingham East, he also said, referring to another MP: “Certainly the number of people in my honorable friend’s constituency who are in debt is exceptionally high. In my constituency, over 40 percent of people struggle to make ends meet when faced with these debilitating pressures and debts. ‘
Consumer experts last night urged Leslie to use his experience at the charity and at Westminster to ensure Covid debt is collected fairly.
James Daley, founder of the Fairer Finance campaign group, said: “Leslie has always been respected as a hard-working politician who advocated good consumer outcomes. While it looks strange that he has switched from membership in charities to a trade association for debt collection agencies, I would like to believe that he will make sure the members are professional and treat customers with the right level of sensitivity. ‘
But the memory of aggressive post-financial crash collection tactics still haunts many small businesses as the UK’s mountain of debt rises.
Figures from the Bureau of National Statistics, released on Friday, showed the government borrowed £ 303 billion by the end of March, up from £ 57.1 billion last year – a record amount and more relative to GDP than any time since World War II.
Earlier this month, Leslie and other city guides attended a virtual summit to discuss how the government’s emergency regimes are being “wound up” and how this “would inevitably have a significant impact on UK lenders”.
Leslie said at the presentation that taxpayers would be concerned about getting the money back because the alternative could be to raise taxes to pay the bill. Hoping the Treasury Department was not implying that these loans could be “written off”, he advised banks to “deal” with customers.
“It takes certain skills to do that, and a lot of the core banks don’t necessarily have those in-house skills. Much of that goes to collections,” he said.
“Capacities in the banking sector and the broader non-bank financial services sector are really being tested here.”
Leslie did not comment on his job change. Regarding bounce-back loans, he said, “When such large amounts of taxpayers’ money has been lent to the economy with the expectation that it will eventually be repaid, ministers have a responsibility to take an effective and sensitive approach to recovering that debt. ‘
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