FOOL'S EYE VIEW
Dealing With Debt Collectors

By Jane Mack (TMFJane)
December 3, 2002

Back in the bad old days when I was merrily trundling through life with a load of debts, I got a letter from a debt collection agency. I can't remember how much I owed – I think it might even have been for less than a tenner – but I remember my initial reaction was 'Ooops!' and then to pay up. It wasn't a large amount, after all, and I could afford to.

The trouble is most people who get letters from debt collection agencies tend not to have the money to pay up. It's why such agencies exist. As with any business you get good and bad ones but debt collection agencies seem to have acquired a particularly unsavoury reputation as a profession.

If there's one thing people complain about most on our Dealing with Debt discussion board, it's the scare tactics that are sometimes used by debt collectors. It's no wonder many people hide their heads ostrich-like in the sand when they think someone's trying to put the frighteners on them.

It was with that in mind that the Office of Fair Trading launched a consultation document last week regarding what is and isn't acceptable behaviour for debt collection agencies. The OFT has already issued guidance to agencies but they want to clarify and strengthen what is and isn't permissible. For example, it is not acceptable for an agency to contact a debtor 28 times in one day to pursue a payment!   It is also not acceptable to threaten (illegally) to seize a couple's posessions for a debt owed by their son.

It is because these practices are still going on that the OFT wants your views. And, yes, they want your views. Just because the consultation document has been sent out to big organisations such as the Advertising Standards Authority and the Financial Services Authority doesn't mean that the Fool in the street can't have some input.

The OFT has quite considerable powers when it comes to dealing with companies who behave badly but they're only going to set standards and to use these powers to enforce them if they know when aa company has overstepped the mark.

For example, in order to operate, debt collection agencies have to have a consumer credit licence - if they behave badly, the licence can be taken away from them thus putting the company out of business. It's a drastic move but one that the OFT has made. Between January and September this year they refused or revoked 39 licences – nine of them involving financial services companies.

Earlier this year the OFT was also given powers to apply to the courts for Stop Now Orders. Under the new regulations they can tell a company off if they're using trading practices that the OFT thinks are unfair and make them promise to stop. If the behaviour doesn't change then, as the name implies, they can get a Stop Now Order which, if breached, can result in the company being taken to court for contempt to face a fine or even imprisonment.

The regulations cover several areas relating to consumer issues so be aware of them just in case you're the victim of bad practice at some point and want to complain. They are: doorstep selling, timeshare, unfair contract terms, consumer credit, distance selling, package travel, package holidays and package tours, misleading and comparative advertising, sale of goods rights, TV broadcasting activities and advertising of medicinal products for human use.

At any rate, the point is an organisation like the OFT has got teeth and they do use them to bite! But they do need evidence of unfair business practices and complaints from people like you and me in order to be able to do something about it.

An example of what the OFT is asking in its consultation document covers the question of how frequently a debt collection agency should be allowed to contact a debtor. They're not permitted to do it at unreasonable times or at unreasonable intervals but what is the definition of 'unreasonable'? Once a week before 8 o'clock in the evening? Once a day but only by post? Who knows?

The OFT wants to know if they should specify what they consider to be reasonable and, if so, what that should be. In my view they should be very specific so that both the debtor and the agency has clear guidance about what is acceptable. I know only too well from some of the desperate posts on our Dealing with Debt discussion board that people are often a bit confused about what rights they have in this sort of situation. But if those rights aren't specifically stated, then how can they know how to fight back?

Remember that just because you're an individual, it doesn't mean that your views are insignificant. If you have a complaint about the way a company is behaving then tell the OFT. It won't get you any redress personally but they can take action against the company. And if you have any comments about the latest consultation document on debt collection agencies then respond to it. It's only if we speak up that we get heard.

More: Get out of Debt | Office of Fair Trading consultation paper