Debtcollection - epetition reply
29 February 2008
We received a petition asking:
"We the undersigned petition the Prime Minister to Introduce legislation to give better protection from harrassment by Debt Collection Agencies."
Details of Petition:
"Debt Collection Agencies are increasingly targeting people for debts that they do not owe or dispute, which calls into question their tracing and data sharing procedures. Little or nothing can be done to deter the harrassment caused by them telephoning day and night, and a constant stream of pointless letters. People avoiding debt leave a trail of misinformation, something which DCA's don't seem to understand. To respond to a letter or call seems to be an automatic admission, whether or not the debt is actually owed. There has to be a better way to protect people from the tactics employed by these Companies, while correctly identifying evasive debtors."
Read the petition
Petitions home page
Read the Government's response
The Government has recently taken measures to strengthen the regulation of the debt collection sector. Under the Consumer Credit Act 1974, debt collectors already require a consumer credit licence in order to operate. The Office of Fair Trading (OFT) has a statutory duty under the Act to ensure that licences are only given to and retained by those who are fit to hold them. The OFT must, when determining whether or not a licensee is fit to hold a licence, consider any evidence that the licensee has engaged in business practices appearing to be deceitful or oppressive or otherwise unfair or improper.
Debt collectors that hold a consumer credit licence need to also comply with specific fitness guidance OFT has issued covering the debt collecting sector. This guidance was issued in July 2003 and applies to all consumer credit licence holders.
If a licensed debt collection agency or creditor persistently fails to comply with OFT's debt collection guidance or there is evidence to substantiate claims that the licence-holder has engaged in unfair business practices, OFT can ultimately revoke its licence, effectively putting the trader out of business. Any persistent failure by a creditor to provide accurate information could also reflect on its fitness to hold a licence.
This guidance outlines the types of business practices the OFT considers unfair and so incompatible with fitness to hold a consumer credit licence.
The guidance covers;
False representation of authority/legal position
Deceptive and/or unfair methods
Statute barred debts
The guidance is available at:
Anyone who wishes to comment on non-compliance with the OFT's guidance, can e mail them at [email protected]
or telephone on 020 7211 5823.
However, in addition to the current rules relating to the debt collection sector, new legislation will strengthen and add flexibility to the regulatory options available to the OFT in operating the consumer credit licensing regime. The OFT has been given new powers by the Consumer Credit Act 2006 (CCA06), which comes into force in April 2008.
These will allow the OFT to place 'requirements' on licensees to modify conduct and impose financial penalties of up to £50,000 for a failure to comply with a requirement. The OFT will also have new information gathering powers enabling it to more effectively pro-actively monitor compliance by seeking information from licensed businesses about their activities including, for example, their debt collection practices.
In addition, the CCA06 also gives the OFT powers to take into account a company's competence to lawfully provide credit when assessing fitness to hold a licence. From April OFT require more information from businesses engaged in 'high risk credit activities' such as debt collection at the licence application stage in order to satisfy itself that the business will be 'credit competent'.
Credit competence refers to the ability of the business to carry out the activities covered by the licence to a reasonable standard. It will also take into consideration business processes and procedures which would assist with maintaining good standards of consumer protection. For example, whether adequate staff training procedures are in place to ensure that the firm's legal responsibilities are understood at every level of the organisation. This means that debt collection businesses will be subject to greater scrutiny at the licence application stage and greater monitoring throughout the life of the licence.