Credit threat over child payments
Separated parents who refuse to pay child maintenance are to face the threat of being turned down for credit such as mortgages, credit cards and mobile phone contracts as a result.
From next March, parents across Britain who fail to keep up with contributions towards their child's upbringing will run the risk of harming their own credit rating, under Government plans.
Arrears built up in the child maintenance system will potentially have the same impact on a non-payer's credit score as other debts where someone has defaulted on their payments.
Having a weak credit rating can mean people are refused forms of financial credit such as personal loans, mortgages, credit cards, hire purchase finance arrangements and mobile phone contracts.
The Government plans to introduce new powers which will enable the Child Maintenance Service and the Child Support Agency to start sharing certain information from their clients' payment records with credit reference agencies.
This data can then be used by financial firms to help them decide whether or not they want to offer someone credit.
Even if someone is not rejected outright for credit, a blotted history could mean that they are given a smaller credit limit and are charged a worse rate of interest than they might otherwise be eligible for, as financial firms see that person as more "risky".
Information about non-payment of child maintenance would potentially be shared with credit reference agencies at the point where a liability order is made against a parent.
Liability orders take place in a small minority of child maintenance cases. They are granted after an application is made to a court for legal recognition of a debt. The process involves informing parents before the application is made.
Just under 1.5 million child maintenance cases are being overseen by the Child Maintenance Service and the Child Support Agency and in the majority of cases, parents who no longer live in the family home do contribute towards their child's upbringing. Between April 2013 and March 2014, 12,410 liability orders were granted.
The new powers, which are subject to parliamentary approval, will also mean that parents with a good payment record can ask that this information is shared if they feel that it could boost their ability to get credit.
The Department for Work and Pensions already has existing contracts with credit reference agency Experian and the new powers will be exercised as an extension of this relationship.
Child Maintenance Minister Steve Webb 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."
The Child Maintenance Service was introduced in 2012 and it will eventually replace the Child Support Agency, which is gradually closing its cases over the next three years.