• You are here:
• Home /
• Publications /
• Investigation Reports /
• Local Authority Housing Loans

Local Authority Housing Loans

CHAPTER 5 RECOMMENDATIONS

Recommendations

I recommend that,

1. where it has not already been done, each local authority should review its current loan administration and accounting procedures to ensure that there is a basic and effective monthly financial control model in operation.

The following template could be used as a model for any revised procedure:

A monthly printout providing details of all accounts due to mature in the coming six months should be sourced from the Loans Computerised System.

The local authority should write to the individual borrowers approximately 1 - 2 months before the loan expiry date notifying them of:

• the month the final payment is due and
• advising them to make arrangements to ensure that no further payments are made on the loan after that date.

Immediately a loan matures a "stop" should be placed on the account. This would ensure that any further payments tendered in respect of the loan are receipted to a loans "overpayment" code.

A loan ledger reconciliation should be carried out each month and any discrepancies should be identified and appropriate corrective action taken.

The loan ledger should also be reconciled at the year end and any discrepancies identified and corrective action taken.

2. where it is not being done already, each local authority must ensure that it complies with the provisions, where relevant, of the Consumer Credit Act, 1995,

3. staff training schemes in account management techniques and instruction / procedure manuals be produced and provided to each account section staff member,

4. any outstanding credit balances on mature or redeemed loans should be examined to ensure that any credits on accounts are refunded, where due, to the borrower at the earliest possible date,

5. internal auditing processes in local authorities should be reviewed in order to

• prevent / minimise the possibility of fraud, including deliberate errors for personal gain,
• pursue outstanding accounts which are in credit and
• minimise the number and value of mature accounts in credit,

6. Local authorities which have not already done so should arrange to refund to all borrowers any outstanding credit balances on mature or redeemed loans which are equal to or in excess of £10,

7. in those instances where a credit balance remained on a revenue account for a period of more than two (2) years and where the amount is equal to or in excess of £100, the Local Authority pay the borrower compensation on the amount in question. In calculating the compensation, local authorities should apply the Consumer Price Index (CPI) and to this end, I have attached a table, at Appendix 2, showing the relevant Consumer Price Index, from 1982 (base year 100) to 2000.

8. local authorities should develop greater use of available Information Technology facilities, such as electronic banking systems, on-line banking and household budget / bill pay services.

Back to contents