Payday Loan Companies and OFT Guidance on Debt Collection

[renegadeimp]

Hello everyone.

 

It seems lately that CAG is getting an abundance of reports about multiple Payday Loan Companies ( PDL's) threatening, harassing and possibly performing illegal attempts at debt recovery.

 

In this thread, i will be going through the OFT guidance for all businesses engaged in the recovery of consumer credit

debts . It is a little long and i will be constantly working on formatting and revisions.

 

The purpose of this thread is to educate consumers to the rules that the PDL's MUST follow when persuing a debtor for an outstanding debt or payment.

 

Feel free to reply with your own comments or experiences. This will allow the users of this site to get a good overall feel for the way PDL's are avoiding or even following the legal regulations.

 

Please understand that the entire purpose of this thread is to educate and inform those people who know very little of their rights, and also to debate certain aspects of the guidance.

Please keep any and all replies calm and civil.

 

The original Official PDF can be found at http://www.oft.gov.uk/shared_oft/business_leaflets/consumer_credit/OFT664Rev.pdf

 

 

 

Ok lets start.

 

1The primary aim of this guidance is to provide clarity for licensed businesses

engaging in the recovery of consumer credit debts as to the standards the Office

of Fair Trading (OFT) expects of businesses engaging in such activities. It sets

out how the fitness test under section 25 of the Consumer Credit Act 1974 (the

Act) will be applied in respect of debt recovery activities. It also identifies the

various regulatory tools available to the OFT.

Although the guidance is called 'debt collection' guidance, it has much broader

application than simply covering the activities of third party debt collectors (as

defined in section 145(7) of the Act). As such, it sets out the standards

expected of ALL parties engaging in the recovery of consumer credit debts.

 

This means that the regulations cover ALL parties involved in the pursuit of an outstanding amount. This means, the Original PDL, any and all DCA's ( who have no legal powers fyi), and even any solicitors they choose to employ. ( Most PDL's use "inhouse" legal teams)

 

 

 

2 Businesses should:

• treat debtors fairly – debtors should not be subjected to

aggressive practices, inappropriate coercion, or conduct which

is deceitful, oppressive, unfair or improper, whether unlawful or

not

 

• be transparent in their dealings with debtors and others –

information provided should be clear and should not be

confusing or misleading

 

• exercise forbearance and consideration – in particular towards

debtors experiencing difficulty - we would expect businesses to

work with debtors with a view to providing them with

reasonable time and opportunity to repay debts and, where

appropriate, to signpost them to sources of free independent

debt advice

 

• act proportionately when seeking to recover debts, taking into

account debtors' circumstances - actions taken in respect ofarrears or default should give proper consideration to available

options and the likely effect of such actions on the debtor

 

• establish and implement clear, effective and appropriate policies

and procedures for engaging with debtors and other relevant

parties,

 

including having appropriate mechanisms for

responding to reasonably queried and disputed debt

 

• establish and implement clear, appropriate and effective policies

and procedures for identifying and dealing with particularly

vulnerable debtors.

 

 

This means that ANYONE involved in chasing a debtor for any payments must not create threatening communication, lie to the debtor in an attempt to gain payment details or some other information, they must lay out everything CLEARLY and in plain language so as not to mislead or confuse a debtor.

 

They must take into consideration a debtors current financial situation and must consider extending the repayment time or vary the repayment amount to ease the burden of repayment. If this is not possible then the PDL should advise the debtor of FREE independent advice.

 

They also must be fair and clear when recovering the monies owed. They must consider all repayment options should a debtor advise the lender that they are unable to meet the repayments stated by the lender.

 

They must also have a solid and fair procedure should a debtor question or dispute any and all parts of a debt.

 

The OFT regulations highlight the following:

 

Most debtors may be regarded as 'vulnerable', to some degree, by

virtue of their financial circumstances. Of these, some may be,

permanently or temporarily, rendered particularly vulnerable by virtue

of the fact that they are significantly constrained in terms of their

ability to engage appropriately with those pursuing them for the

repayment of debts owed.

 

3UNFAIR OR IMPROPER BUSINESS PRACTICES

 

(Please read the following as it seems the vast majority of lenders are clearly breaking the rules here)

 

Communication: businesses should communicate in a clear,

accurate and transparent manner

 

• False representation of authority and/or legal position:

businesses should accurately and truthfully represent their

authority/status and the correct legal position with regard to

debts and the debt recovery process

 

• Physical/psychological harassment: businesses should not

engage in physical or psychological harassment of debtors, or

relevant third parties

 

• Deceptive and/or unfair methods: businesses should be truthful

and fair in their dealings with debtors and others

 

• Charging for debt recovery: charges should not be levied

inappropriately or unfairly

 

• Debt collection visits: those visiting debtors must not act in a

threatening or unclear manner

 

• Statute barred debt: businesses should not use unfair methods

(including misrepresenting the legal position) if seeking to

recover statute barred debt

 

• Data accuracy: businesses should have appropriate processes in

place with a view to ensuring that customer data is accurate

and take reasonable steps to ensure that it is adequate, with a

view to only the actual debtor and valid debts being pursued for

repayment.

These are pretty self explanatory, but if you would like some indepth clarification, feel free to comment. As you can see, it is glaringly obvious that the vast majority of lenders knowingly and willingly break these regulations.

 

 

It is unfair to communicate with debtors, or their representatives, in

whatever form, in an unclear, inaccurate or misleading manner.

 

3.3 Examples of unfair or improper practices are as follows:

a. use of official looking documents intended to, or likely to,

mislead debtors as to their status.

For example, documents made to resemble court documents.

 

b. leaving out or presenting information in such a way that it

creates, or has the potential to create, a false or misleading

impression, or exploits a debtor's lack of knowledge

 

c. those contacting debtors not making clear who they are, who

they work for, what their role is and the purpose of the contact

d. sending misleading communications or making misleading

statements which may induce a debtor to make contact on the

basis of a false or misleading premise

 

g. failing to provide 'debtors' with information on the outcome of

investigations into reasonably queried or disputed debts

 

i. failing to make the debtor fully aware

of the status of the debt

where:

formally and unequivocally, that an offer to

settle a debt, accompanied by the relevant payment, has been

accepted as full and final settlement of that debt (when this is

the case)

 

a. the debtor has offered a settlement payment lower than

the total amount owing

 

j. contacting debtors at unreasonable times

 

k. ignoring or disregarding debtors' reasonable requests in respect

of when, where and how to contact them

The OFT highlight the following:

 

For example, shift workers may ask not to be telephoned during

certain times of the day.

Also, some debtors may request contact by email rather than by

telephone.

 

 

 

Again, as you can see, many lenders break these rules.

 

 

 

 

I also draw your attention to Page 15 of the guidelines which is currently a HUGE issue with Many PDL's. I will just copy and paste them.

 

False representation of authority and/or legal position

3.4 Those contacting debtors must not be deceitful by misrepresenting

their authority and/or the correct legal position with regards to debts

or the debt recovery process.

 

3.5 Examples of unfair or improper practices are as follows:

a. falsely implying or claiming authority or misrepresenting

authority

 

For example, in England and Wales, claiming to work on

instructions from the courts as bailiffs or, in Scotland, sheriff

officers or messengers-at-arms or, in Northern Ireland, claiming to

work on instruction from the Enforcement of Judgements Office,

when this is not the case

 

 

b. falsely implying or stating that action can, or will, be taken,

when legally it cannot be taken

Examples of this include:

• stating or implying that bankruptcy or sequestration

proceedings might be initiated when the balance of the

outstanding debt is too low to qualify for such proceedings

 

• stating or implying that steps will be taken to enforce a debt

where a debtor is making payments under a Debt Payment

Programme Arrangement agreed under the Debt Arrangement

and Attachment (Scotland) Act 2002

 

• claiming a right of entry will be exercised when no court

order to this effect has been granted

 

• claiming that a court order/judgement would be enforced in

the absence of having the proper legal authority to do so

 

• stating that goods will be repossessed when they are

'protected goods' (as defined under section 90(7) of the Act),

in the absence of having been granted the specific

authorisation of a court to do so.

c. falsely stating or implying that a particular course of action

will ensue before it is possible to know whether such action

would be permissible

 

For example, stating or implying that enforcement proceedings will

ensue, including (this is a non-exhaustive list)

ensue before it is possible to know whether such action

would be permissible

For example, stating or implying that enforcement proceedings will

ensue, including (this is a non-exhaustive list)

ensue before it is possible to know whether such action

would be permissible

• warrant of execution

• charging order

• attachment of earnings

under circumstances in which a court judgment has not been

obtained.

f. falsely implying or stating that failure to pay a debt is a criminal

offence and/or that criminal proceedings will be brought

 

Physical/psychological harassment

 

3.6 Putting undue pressure on debtors or relevant third parties (for

example, appointed representatives) is considered to be oppressive

and an unfair or improper practice.

 

3.7 Examples of unfair or improper practices are as follows:

 

a. contacting debtors at unreasonable times and/or at

unreasonable intervals

 

b. pressurising debtors to raise funds by selling their property or by

taking on further borrowing (including extending their existing

borrowing) THIS IS A BIG CONCERN WITH PDL'S

c. multiple businesses

 

A 'relevant third party' in this context is any person representing, or acting on behalf of,

the debtor in respect of the debt recovery process.

seeking to recover the same debt at the

same time, resulting in repetitive and/or frequent contact with

the debtor (or his representative) by different parties

 

 

d. 'threatening' to refer the debt to a third party debt collection

business, with potential cost implications for the debtor, under

circumstances in which the evidence suggests that, in reality,

the creditor has, or can be reasonably concluded as having, no

current intention of doing so

j. failing to allow for alternative, affordable, repayment amounts

when a reasonable proposal is made by a debtor or a third party

representative acting on his behalf (for example, a debt adviser)

(Yet another bone of contention)

 

failing to suspend the active pursuit of recovery of a debt for a

reasonable period under circumstances in which it can be

evidenced that the debtor is developing a repayment plan on his

own account, or with the assistance of an appropriate third

party representative

 

n. making undue, excessive or otherwise inappropriate use of

statutory demands when pursuing arrears or debts

 

p. inappropriately disclosing, or threatening to disclose, debt

details to third parties

 

q. acting in a way likely to be publicly embarrassing to the debtor,

either deliberately or negligently (that is to say, through lack of

care)

For example:

• using postcards, or other correspondence, or leaving answer

phone messages (including via interactive voice messaging

(IVM)) in a way which may disclose to someone other than

the intended recipient the involvement of a debt recovery

business

 

• asking others to pass on messages to debtors, and in so

doing potentially revealing to them that the intended

recipients of such messages are being pursued for repayment

of debts

 

• posting messages on social networking sites in a way that

might potentially reveal that an identifiable person is being

pursued for the repayment of a debt.

 

 

 

I will add more to this thread as time goes on.

Edited June 14, 2012 by MARTIN3030

[clairedcat]

Excellent thread, wonder if site team could put this somewhere it won't get lost in mists of time

[jacktheladuk]

As ever rene, a true gem, a masterpiece!

[willnotdoitagain]

Hope all the other people who are dealing with the pdl read this its fantastic, thanks again Rene

[geeza2012]

Makes you think and helps you

Because when your being chased for debt you know that the company can't over step the line. Thank it makes me fell a lot more firm now.

[Clarkeyuk]

Very interesting read what gets me thow is everyone knows that the PDL company's are not playing ball so why is the OFT not doing anything about it? More needs to be done as many people who take these lones do not know there rights and the PDL company's are getting away with to much to often!!

[renegadeimp]

The answer is simple. People say they are going to complain but dont. if people did complain then they would be investigated and actioned much faster.

[elzerbeth]

I agree with clarkeyuk i have reported toothfairy Ndr and Marshall hoare who are all the same company to the oft the oft cant tell you whats going on and tell you to contact citizens advice . great post though everyone should read

[steuts1]

I sent in a full documented report on Tooth Fairy to OFT and even signed a witness statement over 6 months ago,, my loan that was then £300 is now standing at £2190 !!! I have heard nothing more from OFT and theywont tell me anything when I ask, in case it jepordises anything ,, whatever that may mean. I have long given up any hope of help from them, they now what is going on but seem to be turning ablind eye >>>

[renegadeimp]

Things take time. If they are to take action they need to do a full investigation.

 

Have you contacted Stella creasy mp about your issue? also i think its prettybsafe to say they won't go near a court with this debt, as they would have a very hard time justifying it to a judge.

[sillygirl1]

Very good post renegadeimp, your help is much welcomed on this site.

 

Don't forget we will have a new 'weapon' to use against this murky market, their own 'Code of Conduct' is being enforced from the 24th June, it will be interesting to see how this self-regulated lot hide there imperfections under the old excuse 'admin error' or 'system error' when somebody's bank account is pilfered.

 

I am of the view that if any company removes funds from your bank account on the wrong day or for the wrong amount the contract is ended. You should report them to the OFT as they state this is not on, and also Trading Standards.

 

The CAB is not good at dealing with this problem, my local CAB (and I am in a large town 10 miles south-west of central London) haven't got a clue how to deal with them, nor do they have readily available appointments, in fact I am considering offering my services to them as clearly they are in need of sound advice to deal with these parasites.

 

I will get the link to the PDL companies code, it is somewhere on this site anyway so I should be able to find it.

[renegadeimp]

I wonder sillygirl, if the pdl does debit the wrong amount or debits on the wrong date, if you are able to file a breach of contract. After all, isn't that exactly what a creditor would do if you did the same thing to them?

 

Also i will be editing this thread soon to clear it up and make it much easier to read.

[sillygirl1]

Yes, renegadeimp, that is EXACTLY what is happening when they take money on the wrong date and the wrong amount, you could effectively immediately start a court claim against them for breach of contract and ask for punitive damages too. There hasn't been a 'test case' on this yet so it is still an untried method. You would need to read up on contract law to get the right info to use in the court claim.

 

I've asked the site team to make this a 'sticky' in the forum so that we can link to it when people need to know about the OFT and the Debt Collecing Guidelines.

 

Hopefully the OFT might get more teeth and be able to close these parasitic companies down, it should be a separate licence for each trading name registered, and not registered under 'Other', it needs to be registered under 'payday lending'

 

If they are debt collecting then the licence needs to reflect that.

[citizenB]

Thread has been stuck - however, can we please keep it ON topic and not use it to start individual threads, please.

[MARTIN3030]

It is worth pointing out,that the team has for some time been putting together a comprehensive brief and over view for CAG members,that should be a good resource for all those dealing with payday loan companies.

The release of this has been held over,as we incorporate the revisions announced by BIS,which are due to be compliant with by 25th.July 2012.

[renegadeimp]

Look forward to reading it Martin .

[citizenB]

It is worth pointing out,that the team has for some time been putting together a comprehensive brief and over view for CAG members,that should be a good resource for all those dealing with payday loan companies.

The release of this has been held over,as we incorporate the revisions announced by BIS,which are due to be compliant with by 25th.July 2012.

 

In view of the comments by Martin3030 - I am closing this thread in order to avoid any confusion.