OFT launches revised debt collection guidance

[May Fly]

hollys dad makes a good point.

 

I seem to remember there was talk last year (or maybe the year before) of reducing the time period in the Limitations Act (that which causes 'statute barred' status) and the Government crumbled under the protests from the finance industry.

 

I also remember reading, maybe on here, that there is no particular reason why CRAs are allowed to keep records for 6 years.... it just seems that they decided they would, in line with other records, and the Office of Data Protection decided not to challenge it.... another example of a so called regulator not actually regulating.

 

The DPA doesn't specify any particular period for data retention, only that data should not be kept for longer than necessary. It is the industry that decided it was 'necessary' to keep records of missed payments and defaults etc for 6 years.

[dadofholly]

So the very fact that their is no time limit on how long a CRA can report on your data shows that legislation is needed.

[sillygirl1]

I find it odd too, the employment agencies claim this is part of their 'security check process' but it has NOTHING to do with security, if it had none of the newly arrived migrants would be able to find work as they would not be on the system and therefore not have a credit rating.

 

I think the whole default scene is now being misused and roundly abused, a default should happen one month after the missing payment regardless, then there would be no argument from the likes of the Debt Buyers and Sellers Group (DBSG) who are unregulated as to their 'legal claim' on the person. If you have repaid the default then the marker comes off. How simple and straightforward is that?

[silverfox1961]

Going back to credit reference agencies holding data for 6 years. As far as I am aware, there has never been any regulations to cover it. The ICO accept that 6 years is a reasonable time for defaults to show.

I think it is because County Court Judgements stay on your file for that long and the Statute of Limitations for debts being 6 years is behind the reasoning to allow defaults to stay for 6 years.

[dadofholly]

Going back to credit reference agencies holding data for 6 years. As far as I am aware, there has never been any regulations to cover it. The ICO accept that 6 years is a reasonable time for defaults to show.

I think it is because County Court Judgements stay on your file for that long and the Statute of Limitations for debts being 6 years is behind the reasoning to allow defaults to stay for 6 years.

 

I would argue that even the reporting of CCJ's should be limited to approx 3 years too.

 

People can end up with CCJ's simply because they have been made redundant, suffered a long illness or other personal tragedy in their life - all outside of the individuals control - but you can plan and commit a crime of dishonesty, be sent to prison - and have your slate wiped clean in less time.

 

The message is - if you get into debt go and rob the money to pay for it because it may cause you less hassle in the longer term.

[sillygirl1]

Yes, I agree that debt is seen as more of a 'social crime' than anti social behaviour and flytipping....

 

Well the bankers themselves are very guilty of social crime, there is a radio ad for a well known banking group which clearly states "we helped x amount of companies start up last month/year", well how many others did you help close down? I bet it is more than the amount you helped start up!

 

CRAs have become too big, too demanding and not transparent in their dealings with people, if you have a problem they refer you to the original creditor, if the original creditor has gone bust then where do you go? This is why I believe ONLY THE ORIGINAL CREDITOR CAN MARK OUR CREDIT FILE(S). If the original creditor goes bust then the file is either immediately closed down or removed completely.

 

We MUST be allowed to tell Big Brother how to deal with OUR data. It is not a 'free market economy driven by data sets' any more, the free market has gone with the credit crunch.

[dadofholly]

Michael Meacher MP is a man who dislikes CRA's - i may drop him a line along with one to my own MP.

[42man]

Can we not get bankers credit files marked with a D for their actions ?

[sillygirl1]

Don't forget MP Stella Creasy.... she is actively campaining against payday loan companies, and might want to get her teeth into the CRAs which help send people to these sub-prime lenders by their 'non regulated, non licenced' hold on our information.

[silverfox1961]

Don't forget MP Stella Creasy.... she is actively campaining against payday loan companies, and might want to get her teeth into the CRAs which help send people to these sub-prime lenders by their 'non regulated, non licenced' hold on our information.

 

Wonder if she will be interested in CFO?

[theghost]

Don't forget MP Stella Creasy.... she is actively campaining against payday loan companies, and might want to get her teeth into the CRAs which help send people to these sub-prime lenders by their 'non regulated, non licenced' hold on our information.

 

What regulation would you like to see on payday loans?

 

The 2 issues with PDL are two issues that the Govt generally stays away from regulating - consumers free choice to enter into contracts and limiting price.

 

I would be surprised if they make any changes to those two issues - they may reduce price/rates but I bet it won't be to a very cheap rate.

[BRIGADIER2JCS]

There is also the new Financial Conduct Authority

which will be taking an interest in PDL.

[theghost]

The FCA will be taking over ALL credit matters from the OFT. There is also a possibility the entire Consemer Credit ACt will be done away with - but prob not for a couple of years - to be replaced by FSA style regulations - instead of laws you have rule books.

 

If such a change does happen then that is probably the best time to introduce wholesale chanegs to CC law.

 

The OFT is likely to lose most of its consumer protection stuff.

[BRIGADIER2JCS]

Consumer protection is not all about financial matters.

[theghost]

Maybe not, but that doesnt take away from my comment.

 

The main thing it will probably be left with is market level stuff like competitions and mergers and market studies.

[BRIGADIER2JCS]

Maybe not, but that doesnt take away from my comment.

 

The main thing it will probably be left with is market level stuff like competitions and mergers and market studies.

 

Fine

[citizenB]

Posted by mayfly

 

I seem to remember there was talk last year (or maybe the year before) of reducing the time period in the Limitations Act (that which causes 'statute barred' status) and the Government crumbled under the protests from the finance industry.

 

I also remember reading, maybe on here, that there is no particular reason why CRAs are allowed to keep records for 6 years.... it just seems that they decided they would, in line with other records, and the Office of Data Protection decided not to challenge it.... another example of a so called regulator not actually regulating.

 

The DPA doesn't specify any particular period for data retention, only that data should not be kept for longer than necessary. It is the industry that decided it was 'necessary' to keep records of missed payments and defaults etc for 6 years.

 

Yes, back in 2009 there was quite a lot of publicity about reducing the limitation period.. But as you can see from the following - Debt purchasers/creditors are quite powerful and the theat of flooding the courts with 50,000 claims on the day, if the change was made seem to have halted discussion !!

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?203417-Limitations-Act-changes-again

 

 

Credit Today online - Limitations consultation imminent

 

xx

 

Limitations consultation imminent - 08/06/2009

 

The Ministry of Justice last week met representatives from the debt collection industry to discuss proposals to change the statute of limitations for civil debt.

 

A consultation is to be released this week on government plans to change the time civil debts can be chased from six years to three. The Credit Services Association, which represents debt collectors, is concerned that the transition to a new system could have an adverse effect on debtors, the industry and the courts.

 

Sara de Tute, compliance director for the CSA, said the organisation will gather views from members before responding to the consultation. "We were given a quick look at the document and it is quite debt collection and debt purchaser focused," she said. "It is likely we will oppose the cut."

 

If the proposal is enacted and implemented, the industry will have concerns about the transition. "At the moment we don’t know when it would come in and how it would be phased in – whether there would be transitional provisions or whether it would be retrospective," said de Tute.

 

Industry commentators expressed confusion over government aims, saying the MoJ’s proposal would encourage earlier litigation while the Department for Business Enterprise and Regulatory Reform is actively encouraging creditors and collectors to allow debtors breathing space.

 

One debt buyer said cases would almost certainly be advanced and the MoJ runs the risk of creditors litigating on tens of thousands of cases overnight. He added that creditors and debt buyers would be forced to litigate against ‘gone aways’ using the last address – obtaining judgment by default. "We need to make sure we have enough transition time, otherwise we’ll have to sue 50,000 people the day they make the change."

 

De Tute added that a disorderly transition would place great strain on the courts system. "I don’t think the courts could cope with it," she said.

 

The consultation is due to be out later this week and will run until the end of July.

[ScarletPimpernel]

De Tute's statement was no more than a bare-faced threat to disrupt the court system if the law was changed. Quite disgraceful, but exactly what you'd expect from the greedy bullies of the debt industry.

 

If the limitations law was changed, the debt industry would simply have to deal with it. Especially if the law also changed to require DCAs making court claims to present the relevant documentation with the claim...

[spartathisis]

The ICO told me that they didnt think that the fact MBNA had my details on their systems 10 years after they had sold the debt on was a problem, it was their standard practice and so I wasnt singled out. They closed the file.

[theghost]

You could argue that if you can chase someone for a debt 6 years after they have stopped paying then you need to be able to hold the data for at least 6 years.

 

In one of my previous jobs the standard time was 7 years - although some items we kept for 13 years!

 

 

As far as going to three years - it gives a OC/DCA much less time to collect debt so arguably they could have become even more aggresive should that change have been made.

[dadofholly]

As far as going to three years - it gives a OC/DCA much less time to collect debt so arguably they could have become even more aggresive should that change have been made.

 

Yes that could be argued but it is not a reason not to do it - but it is a reason to sort out the DCA business once and for all - with clear - unambigous guidelines and steps for them to take.

 

They would know where they stand - and the consumer would know where they stood.

 

The other big problem is that banks will not lend to people with poor CRF's even if a lot of the time it was not the fault of the individual, even when that individual is now back on their feet. And as 97% of the money in the economy is created when banks make loans - the 6 year rule actually hampers the economies growth.

 

More people defaulted = less loans to people who could now afford it = less money in the economy.

[BRIGADIER2JCS]

This measure would go a long way to

easing the problems who through no

fault of their own are thrust into financial

hardship, those seriously injured as a result

of accidents and so unable to work, those

suffering from long term incapiciting ilness.

It will also go some way to cleaning up the

debt collection industry together with the

FCA and new rules and gudance.

It brings England and Wales into line with Europe.

[Old Cogger]

Be honest a law for one & a law for another in this country, why the difference between one side of the fence than the other i.e. england & scotland = double standards as all the parliment do and the so called law.??????ss

 

where a so called DJ i.e. recorder in chambers ignore citations from higher courts quoting CPRs. -

[theghost]

Well CRAs were set up by finance companies to manage risk for lending.They are not there for the benefit of the consumer.

 

I wouldn't have a problem with it going down to three years - because after all it would benefit me if I defaulted on a loan - it wouldn't benefit the finance companies because they would lose a lot of historical data. The CRA is supposed to be a factual record of your credit history - nothing more and nothing less (although I accept there are mistakes amde, but reducing to 3 years wouldn't necessarily solve that issue in general).

 

The only type of consumer who may be worse off under such a change are those who have had a good credit history 3-6 years ago but have had no credit in the past 3 years - they may be less likely to get credit if they have no good credit record available.

 

Yes, poor individuals are screwed over by things out of their control but you seem to be ignoring the fact there may well be millions of people out there with very bad financial management issues trying to get more credit (only have to look at various forums to see this in action). By reducing the CRA to 3 years you arguably increase the risk to lenders.

 

Given the tough climate at the moment, I would imagine if the finance industry went to the Govt and said by reducing the CRA down to three years that would increase the risk of bad debts then I would suggest the Govt would listen.

 

The only way it would 'clear up' the DCA industry is to make it harder for them to collect debt and reduce the amount they can get it (if limitations was reduced) - that doesn't 'clear up' their bad behaviour - it just reduces possible income for OC and DCA. And again, I do not think the Govt would necessarily advocate OCs potentially losing lots of income that they would otherwise be entitled to.

 

The rules for DCAs are already clear - the bad behaviour just needs to be enforced more heavily.

 

So I don't really see much chance of a change because there are not enough arguments to support it. On top of that the Govt won't make any massive changes that cost businesses lots of upheaval and costs without massive justification.

 

I do agree though that CR shouldn't be used for employment purposes unless absolutley necessary.

[dadofholly]

Well CRAs were set up by finance companies to manage risk for lending.They are not there for the benefit of the consumer.

 

I wouldn't have a problem with it going down to three years - Nice to see you have finaly changed your position after insisting for so long that 6 years is fine. because after all it would benefit me if I defaulted on a loan - it wouldn't benefit the finance companies because they would lose a lot of historical data. The CRA is supposed to be a factual record of your credit history - nothing more and nothing less (although I accept there are mistakes amde, (Not just mistakes but abuses by DCA's in changing default dates etc - which the CRA's only take the creditors word for without verification) but reducing to 3 years wouldn't necessarily solve that issue in general (Have never suggested it would - it is not the reason for reducing the time scle).

 

The only type of consumer who may be worse off under such a change are those who have had a good credit history 3-6 years ago (Yes that is what i have been saying - and one of the reasons i support the change) but have had no credit in the past 3 years - they may be less likely to get credit if they have no good credit record available. (No Credit history is no worse than a poor credit history - The lender can take a view of risk based on other factors)

 

Yes, poor individuals are screwed over by things out of their control but you seem to be ignoring the fact there may well be('may well be' - is there is is there not? a very sweeping and unsubstantiated arguement) millions of people out there with very bad financial management issues trying to get more credit ('Very bad financial management'? i would argue that the real issue here is falling standards of living - wages being depreciated in real terms - rising costs in fuel, housing etc. that are not taken into account in all inflation indices, coupled with rises in broad base taxes instead of income based - causing a fall in the ability to save - and thus more people seeking credit - though there are some exceptions to this granted) (only have to look at various forums to see this in action). By reducing the CRA to 3 years you arguably increase the risk to lenders. (There is always a risk to lenders - people can fall ill or be made redundant at any time - any time scale can be used to argue that it is a risk to lenders - if it was 10 years and being reduced to 6 that same arguement can be used - they would just have to adapt to the new market conditions)

 

Given the tough climate at the moment, I would imagine if the finance industry went to the Govt and said by reducing the CRA down to three years that would increase the risk of bad debts (Personal bad debt does no effect government debt) then I would suggest the Govt would listen. (And if it could be shown that actually the lack of credit in the system is actually a bar to growth - no new money = no growth - then the opposite view may be taken)

 

The only way it would 'clear up' the DCA industry is to make it harder for them to collect debt and reduce the amount they can get it (if limitations was reduced) (That does not follow - it does not make it harder for them - it just means they can't sit on them for 6 years without takin action) - that doesn't 'clear up' their bad behaviour - it just reduces possible income for OC and DCA. (Then they will have to change their business practices from one of confrontation to mediation and accommodation) And again, I do not think the Govt would necessarily advocate OCs potentially losing lots of income that they would otherwise be entitled to. (Again poor arguement - remember that it is only dormant accounts that actually fall off CRA's files - active accounts are shown untill the debt is settled - the DCA's still have 3 years to take action - and in any case it is the OC's that this will effect - the DCA' are just worried that debts will become SB before thay have chance to make a fast buck out of peoples misfortune)

 

The rules for DCAs are already clear - the bad behaviour just needs to be enforced more heavily. (So as a 'contributor' (i feel i should probably use the word allegedly) of a consumer help forum, i would hope that this is exactley the type of practice you would be against - and use your energy to stop - rather than sit under your bridge and try and pick holes in everyone elses efforts and contributions) With consumer advice such as yours who needs credit today?

 

So I don't really see much chance of a change because there are not enough arguments to support it.(disagree - and in any case you dont seem to look for arguements to support consumers - only in support of DCA's and the credit industry) On top of that the Govt won't make any massive changes that cost businesses lots of upheaval (upheaval? rather dramatic - and unsubstantiated arguement) and costs without massive justification. (If they can change the law on criminal convictions for economic and social reasons then they can change the law on credit reporting for the same)

 

I do agree though that CR shouldn't be used for employment purposes unless absolutley necessary.

But it is being used so i hope you will make your voice heard in opposition.