FOOL'S EYE VIEW
Debt Collectors Told To Behave

By Jane Mack (TMFJane)
July 15, 2003

A few months ago I wrote about how I'd once had a letter from a debt collection agency. I'd paid up immediately because the letter was a bit scary and the sum was so small I could afford to.

Many people in debt aren't so lucky and, unfortunately, some of the tactics used by the more unscrupulous collection agencies can make debt problems even more frightening than they already are.

As an example, here's an excerpt from a post made recently on our Dealing with Debt discussion board:

I have received a letter from an agency demanding full payment of a credit card debt I defaulted on. The total owed is £1,600, I rang them and offered £50 a month, which is all I can afford, as my income has reduced drastically, and is about what the minimum on the card would be.

The woman said that wasn't acceptable, that the whole amount or 10% for 3 months was all they could accept. When I said I couldn't afford any more, she said they would start legal proceedings. I asked if that meant I would be able to state my case in court? I was told no for this amount a Bailiff would be sent, with a policeman, to seize my property. She then said I could have a couple of days grace to see if I can afford £160 a month. Have I fallen foul of scare tactics? Or can/will they go straight for a bailiff?

I'll be kind here and say the debt collector was 'mistaken' when she said our Fool would not be able to have his say in court. She was also wrong about a policeman being sent with a bailiff to seize his property (a police officer could only be called upon if there was a breach of the peace). Quite apart from anything else, the debt collection agency cannot do anything without an order from the court.

The problem is that people who are being chased by collection agencies often don't know what their rights are. This isn't surprising really as the rules about how agencies should behave haven't been spelled out clearly so some of them push the boundaries of the law as far as they can and sometimes overstep the mark.

This week the Office of Fair Trading issued more specific guidance about what they would and would not permit. And as they have the power to revoke an agency's licence to practise, people who feel they're being unfairly treated should read up on their rights to protect themselves from unscrupulous practices.

For example, some agencies flatly refuse to deal with third parties such as the Citizens Advice Bureau or the Consumer Credit Counselling Service who are acting on the debtor's behalf. This will no longer be permitted without a jolly good reason.

Bully boy tactics such as spontaneously visiting a debtor at home when they know he or she is vulnerable – for example, when a doctor's certificate has been provided saying the debtor is ill – is also not permitted as is refusing to leave when asked to do so.

Other points include:

• Failing to investigate or provide proper details/records when a debt is queried or disputed
• Pursuing third parties for payment when they are not liable
• Falsely implying or claiming authority – such as claiming to be working on court authority
• Claiming a right of entry when no court order has been obtained
• Misleading debtors by the use of official-looking documents such as letters resembling court claims
• Not giving adequate notice of the date and time of a visit

Interestingly, the OFT has also ruled that creditors who use debt collection agencies, whether in-house or external, will be liable to scrutiny and even to have their own licences revoked if they do not take an active interest in how their agency is behaving. In the event of a problem, the OFT says they would expect to see that the main creditor had taken care in the selection process, that complaints had been investigated and that firm action had been taken as appropriate.

Unfortunately, the OFT has not been specific about when an agency is allowed to contact a debtor nor how frequently. They say they will deal with complaints about unreasonable times and unreasonable intervals on a case by case basis. However, as most of the respondents to their consultation paper on the issue agreed that contacting debtors between the hours of 8am to 9pm Monday to Friday would be reasonable, it is to be hoped that the OFT will use this as a general benchmark.

At any rate, if you're being chased by a debt collection agency, mug up on the OFT's new guidance and use it to protect yourself from unfair practices. That doesn't mean you shouldn't face up to your debts – you should. But at least there's a better balance now between your rights and theirs.

As the OFT put it: "Now that the guidance has been issued in final form we expect debt collectors to abide by it. We would hope that creditors will find the guidance useful in assessing debt collectors they use, whether in-house or not. Where the guidance is not being complied with we want to know."

Find out more about the OFT's Debt Collection Guidance and how to Get Out Of Debt. Also read What Can They Do To Me?