Debt collecting firms often charge as much as \u00a370 on top of fines (Gareth Fuller\/PA Wire) <\/p>\n
Companies that charge drivers<\/a> fees for recovering parking ticket debts are operating with an average profit margin of more than 60 per cent, a Government document has disclosed.<\/p>\n The Ministry of Housing, Communities and Local Government (MHCLG) stated that this figure indicates a “market failure”, while the AA<\/a> branded the margins “disproportionately high”.<\/p>\n Debt recovery agencies are employed by parking operators to pursue payment for unpaid tickets, often adding up to \u00a370 in additional fees per ticket for drivers.<\/p>\n These charges were set to be banned when the then-Conservative<\/a> government introduced a code of practice in February 2022, but this was withdrawn four months later after a legal challenge by parking companies.<\/p>\n A new consultation document setting out the current Labour Government\u2019s proposed code stated the \u00a370 cap is \u201clikely to be higher than can be reasonably justified\u201d but it is \u201cseeking further evidence\u201d.<\/p>\n It added that recovery agencies have \u201can average profit margin of approximately 63 per cent\u201d.<\/p>\n This is \u201ccomparable to highly innovative companies\u201d despite the businesses involved providing \u201cstandard services such as payment plan provision\u201d, according to the document.<\/p>\n It continued: \u201cWe therefore do not consider them to be providing significantly innovative services, and as such the high profits may be indicative of these firms having too much control over the market, thereby indicating that there is a market failure.\u201d<\/p>\n Parking operators can take drivers to court if they continue to resist paying for tickets.<\/p>\n The MHCLG<\/a> said debt recovery agencies would break even with fees of approximately \u00a326 per ticket, if the proportion of those paying was stable.<\/p>\n Jack Cousens, head of roads policy at the AA, said: \u201cThe 63 per cent profit margin feels disproportionately high for the services provided.<\/p>\n \u201cThis only highlights the need to curb the sector and ensure balance for all.<\/p>\n \u201cThere remains an overzealous cohort among some private parking operators where they hand over cases to debt recovery firms for seemingly innocuous charges.\u201d<\/p>\n He added that the ban on debt recovery fees in the original consultation was \u201cthe right position\u201d and claimed the latest version \u201cfalls short of the mark\u201d.<\/p>\n Steve Gooding, director of motoring research charity the RAC Foundation<\/a>, said: \u201cThe profit margins revealed by the Government help explain why there are now more than 180 private parking firms buying vehicle keeper records from the DVLA<\/a> so they can send demands to drivers \u2013 it\u2019s a huge and profitable business.<\/p>\n \u201cThe private parking industry\u2019s failure over time to be more open about its activities is part of the problem and its ongoing reluctance to open its books to official scrutiny shows why ministers must follow through with plans to bring transparency and independence to this sector.\u201d<\/p>\n Recent analysis by the PA news agency and the RAC Foundation found 4.3 million tickets were issued by private companies to UK drivers between April and June.<\/p>\n That was a 24 per cent increase compared with the same period last year.<\/p>\n A BPA spokesman said it \u201cstrongly disputes the Government\u2019s profit calculations\u201d and called on it to \u201cpublish the methodology behind these figures\u201d.<\/p>\n He continued: \u201cThe numbers presented are misleading and fail to reflect the reality of the debt resolution sector.\u201d<\/p>\n He insisted the purpose of debt recovery fees is \u201cnot to generate profit but to act as a fair and effective deterrent against deliberate non-payment\u201d.<\/p>\n An MHCLG spokesperson said: \u201cThis Government inherited a private parking market that lacks transparency and protection for motorists.<\/p>\n \u201cWe share their frustration, which is why our private parking code of practice will drive up standards in the industry and hold parking operators to account.<\/p>\n \u201cWe consulted on the current cap on debt recovery fees and will publish our response as soon as possible.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Debt collecting firms often charge as much as \u00a370 on top of fines (Gareth Fuller\/PA Wire) Companies 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The Ministry of Housing, Communities and Local Government (MHCLG) said the profit figures showed a market failure (PA) <\/p>\n