THURROCK Council has been slammed for charging residents £71,200 in illegal fees.
An investigation by the Local Government Ombudsman has found that Vertex, the private company hired by the authority for council tax recovery, charged 178 residents a £400 fee which was “illegal and could not be enforced”, in relation to council tax arrears.
The blunder came to light after a resident, who cannot be named for legal reasons, made a complaint about the fee to the ombudsman.
Vertex took steps towards making the resident bankrupt by serving him with a statutory demand for council tax arrears in November 2008.
As an alternative it said the man could pay back the money owed in instalments, if he paid a £400 fee to cover the administration costs of the arrangement.
The resident agreed to pay by instalments but challenged the £400 fee.
Soon after the Ombudsman started an investigation into the complaint, the council accepted it was wrong to make the charge and immediately stopped Vertex from making any further charges.
Thurrock Labour party chairman, cllr Carl Morris, has called the charges “shameful”.
He said: “The Ombudsman’s findings are damning and indicative of Thurrock Council’s complete lack of management, control or oversight Council of this contract.
“This shameful episode may be the fault of Vertex, but the responsibility is squarely with Thurrock Council”.
Of the 178 residents Vertex tried to charge, 128 had yet to pay so the charge was withdrawn.
Twenty four had paid some of the fee, so what remained has been withdrawn and what they had paid will be taken off the arrears or refunded.
They will also get a £40 goodwill payment.
Twenty six residents paid the fee in full, so they will also get a full refund and a £40 goodwill payment.
The ombudsman’s report states that Vertex introduced the instalment arrangement fee without it being approved by the council, but the council failed to monitor actions being taken by the company.
The LGO has recommended that the council brings in a procedure to ensure that policies introduced by Vertex are “properly scrutinised and implemented” and has asked for proof of the procedural improvements within three months.
Council spokesman Andy Lever said: "Thurrock Council accepts the Local Government Ombudsman’s report and the comments and recommendations within it. The council apologises to the resident and has agreed with him the payment of £100 ― £40 as a goodwill gesture and £60 for to reflect his time and trouble on this issue.
"As the Ombudsman notes, Thurrock had already stopped charging this fee and has now agreed to reimburse or offset the debt of everyone who paid all or part of the fee, plus £40 as a goodwill payment."
Cllr Barry Johnson, Cabinet member for Finance at Thurrock Council, said: “Thurrock introduced this scheme with the best intentions, with the aim of preventing having to make local residents bankrupt for council tax arrears, a life-changing experience.
“As a result of the Ombudsman’s judgement, Thurrock Council now has no option but to take bankruptcy proceedings in the County Court against anyone who still has an outstanding council tax debt of over £750.”
Cllr Johnson added: “I will be writing to the Minister responsible asking for him to consider changes in the law so that councils across the country, not just here in Thurrock, can avoid making their residents bankrupt and providing them with a way of paying off that debt over time.
“I think this is a way of protecting both the council, which needs to bring in as much of its tax as possible, and supporting those who may have genuine problems in paying their arrears."