'Wild West' of public sector debt collection needs to end, urges Lowell CEO John Pears

He said that in addition to the need for better public understanding of how problem debts occur, often as a result of an unexpected life-changing event, the way that some councils and other organisations deal with the issue needs to change.

"If you think where mental health was 20 years ago where there was an unwillingness to acknowledge it and there was no formal communication about it, we have moved on so much,” he said.

"With debt now there is still a stigma attached to it for no reason for the people involved.

"We want to make sure we continue to tackle that stigma.

"By what we do as a firm, we are trying to contribute to that debate.

"We are trying to make sure our customers have access to better financial education. A lack of that is one of the reasons that people tell us they have got into debt. We want to make sure that we continue to drive better standards in our industry.

"One of the things that really frustrates us is we go through a lot of effort with customers to make sure we treat them in a certain way and ensure we assess their vulnerability accurately.

"Those rules don’t apply to local councils or Government bodies or the Department for Work and Pensions.

"You have got two tier treatment for consumers in the UK.

"One is by the industry under a very strict code regulated by the Financial Conduct Authority and the second are public bodies where quite frankly it is little bit like the Wild West.

"From my perspective, we need to get a fairer playing field so customers understand that if they are in debt they are going to be treated fairly. I’m quite passionate about it.

"It is not regulated at all and HMRC don’t have to assess whether you can pay your priority bills before they claim money back, DWP if they stop benefit payments don’t do any assessment if you a vulnerability and councils often go straight to enforcement and court for unpaid council tax.

"This just tips and escalates matters with consumers in the UK.

"We have seen having a long-term, far more flexible approach, pays massive dividends. But councils are on quarterly KPIs where they are driven to get as much money as they can short-term.

"All these agencies need to take a far more customer-centric view on this because people do want to pay back debts if they are given the opportunity to do so in a fair way.”

Concerns about debt collection practices of public sector bodies falling behind the standard of regulated creditors in the private sector. have previously been raised by organisations such as Citizens Advice.

In 2010/11, 21 per cent of debt problems reported to Citizens Advice advisers were related to debts owed to public bodies. By 2018/19, this had increased to 42 per cent.

The Treasury Select Committee concluded in 2018 that public bodies are “often found to be the most zealous and unsympathetic of creditors in collecting arrears”.