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10 November 2014

'Pay your child maintenance or damage your credit rating' says Government

Separated parents who fail to contribute financially to the upbringing of their children, face ruining their credit rating from next year, says a Department of Work and Pensions press release.

From March 2015 (subject to Parliamentary approval), the Child Maintenance Service and Child Support Agency (CSA) will begin sharing certain information about the payment records of their clients with credit reference agencies.

This means that arrears built up in maintenance payments will have the same effect on people’s credit score as other debts. Having a poor credit rating can cause people to be refused loans, mortgages, credit cards, hire purchase finance arrangements, mobile phone contracts and other forms of financial credit.

Principally, information will be shared about an individual when a liability order is made against them – a measure used as a last resort after other efforts to encourage payment have been exhausted. In the year April 2013 to March 2014, 12,410 liability orders were granted.

But it is also expected that the introduction of the new measure will have a deterrent effect on those who may otherwise choose to evade maintenance payments, so getting more money flowing to the children and families who need it.

Non-resident parents who have a good maintenance payment record will also be able to request that information about them is shared if they feel it may help improve their credit rating.
Child Maintenance Minister, Steve Webb MP, said:
"For too long, a minority of absent parents have got away with failing to pay maintenance, leaving families without that financial support. This government is determined to take action to tackle this kind of irresponsible behaviour and support families.
I would hope that we see this power used very little, because the deterrent effect of a possible negative mark on a person’s credit rating will convince those who have previously failed to pay towards their children’s upbringing to do the right thing.
Coming on the back of the launch of the family test, which has put the interests of family relationships at the heart of the policy making process, this is another example of how this government is supporting families and building a fairer society."
While the majority of non-resident parents do contribute towards the maintenance they owe – with compliance amongst CSA clients reaching a high of 86.2% in June this year – this new measure is aimed at targeting the minority who fail to pay.

It is just the latest in a catalogue of radical reforms the coalition government has made to Britain’s child maintenance system.
Aimed at delivering fairness for families, children and taxpayers, the changes are seeing the old CSA wound down and its replacement, the Child Maintenance Service, taking a new approach.

Parents are encouraged and incentivised to co-operate in the best interests of their own children, while a vastly improved, efficient statutory service remains in place for separated families who choose to continue to rely on the state.

New support has been introduced giving families a better chance to take state bureaucracy out of their family arrangements – including the Child Maintenance Options helpline and website, and local projects around the country helping separated parents to continue to work together.

In addition, an online banking-style self-service facility has been launched allowing parents to manage their maintenance arrangements and keep track of payments. And new enforcement charges have been introduced to recoup the costs of pursuing those who continually don’t pay what they owe.

More information about all the reforms to the child maintenance system is available at www.gov.uk/child-maintenance.