Strategy to recover Bounce Back Loans could return £6bn to Exchequer

A consistent policy for the repayment or recovery of Business Bounce Back Loans (BBLs) could return £6bn to the Exchequer, according to the Credit Services Association (CSA).

The trade association for the debt purchase industry suggested the use of professional debt collection agencies to “ensure best practice and forbearance” could also make a difference to the public purse.

A report from the CSA has called for the government to invest in a dedicated “BBL Engagement Scheme” and provide a warranty against fraud in the event that a debt is sold on at some future date.

The report recommended that the creation of such a scheme to engage with customers – of around £10m annual investment over the next three years – could yield between £3bn and £6bn in additional returns to the Exchequer. The CSA suggested the investment should be seen in the context of a reported £42m spent on the FCA’s campaign heralding the deadline for claims against miss-sold PPI.

The CSA also highlighted that if the government pursues an active collections strategy consistently, it could save the taxpayer the equivalent of the NHS’s annual capital budget allocation.

“When such vast sums of taxpayer money have been lent to business in the expectation it will eventually be repaid, Ministers have a responsibility to pursue an effective – as well as a sensitive – approach to recovering that debt,” commented CSA chief executive, Chris Leslie.

“Engaging in dialogue with and understanding the circumstances of those SMEs who have taken out BBLs will take particular skills. If the Treasury adopts the approach we recommend, not only can it tailor forbearance according to need, it can recoup perhaps £6bn more than it might do otherwise – saving the equivalent of the annual NHS hospital building budget for the taxpayer.”

CSA head of policy, Henry Aitchison, added: “We’re concerned at some estimates suggesting between 35% and 60% of these loans may not be repaid in full. The government must therefore be clear and consistent in its policy towards collections and communicate regularly with SME customers.

“An approach that works with a borrower and is sensitive to their individual circumstances inevitably yields better returns which will be important for the taxpayer and reflects the highly unusual situation which the BBL scheme was designed to ameliorate.”

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