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Debt collectors warned
14 July 2003
OFT publishes guidance on unfair debt collection practices
Debt collectors are being told to deal fairly with debtors or face losing their consumer credit licence, with new guidance published by the OFT today.
The guidance is aimed at all consumer credit licence holders and applicants and applies to the collection of debt once an account is in default. It sets out the types of behaviour that the OFT considers to be unfair and which could call into question fitness to hold a licence. Examples of the types of behaviour covered include:
- failing to investigate or provide proper details/records when a debt is queried or disputed
- failing to deal with appointed third parties such as Citizen's Advice Bureaux or independent advice centres
- pursuing third parties for payment when they are not liable
- falsely implying or claiming authority – such as claiming to be working on court authority
- contacting debtors at unreasonable times and/or intervals
- claiming a right of entry when no court order has been obtained
- misleading debtors by the use of official-looking documents such as letters made to resemble court claims.
The guidance also makes it clear that lenders must not ignore the unfair practices of debt collectors acting on their behalf, whether in-house or external. Lenders should take care in the selection of third parties, investigate complaints and take action where appropriate. Failure to do so will call their own fitness to hold a licence into question.
The debt collection sector attracts the largest number of licensing complaints to the OFT. The guidance will enable the OFT to take speedier action against unfit licence holders and it should therefore help avoid problems arising in the first place.
Welcoming the new guidance John Vickers, OFT Chairman, said:
'Debt problems can affect some of the most vulnerable consumers. Debt collectors must carry out their business fairly and openly. The new guidance explains what is expected of debt collectors and sets out the sort of behaviour that could lead to action against licence holders.'
Source: oft.gov.uk