Debt collectors given new guidance

The trading watchdog, The Office of Fair Trading (OFT) has set out a new range of measures that aim to stamp out unfair debt collection practices and is currently drawing up new debt collection guidance.

The new guidance is intended to make it perfectly clear that the rules apply to all businesses involved in debt recovery, be they lenders to debt collection firms and debt buyers, as well as law firms and debt tracing agents.

The OFT also stressed the responsibility creditors have to ensure that the information they pass on to debt collection agencies and firms that buy debt, is accurate. Tens of thousands of complaints come to the OFT office each year in respect of debt agencies that pursue debt which is based on incorrect information which was avoidable but for the instructing clients not keeping accurate records.

Under the new guidance, which is to be consulted on for 12 weeks, creditors must also update records and credit reference agency data if it is established that an individual has been wrongly pursued for a debt, or if the money has been repaid.

The OFT said it wanted to ensure that debt collection was carried out in a transparent and fair way, and that debt enforcement tools were used appropriately, taking into account an individual’s circumstances.

The OFT’s director of consumer credit Ray Watson, said: “Unfair debt collection practices can have a real impact on consumers’ lives, so it is vital that we identify and root out unacceptable behaviour.

“To improve standards and reduce the risk of the wrong person being pursued for payment, the OFT is providing more clarity on the obligations of creditors, tracing agents and debt recovery firms in ensuring the accuracy of data. Companies should not be using irresponsible and unfair practices to recover money.”

The updated guidance will also take into account changes to the law, and the OFT’s recently re-issued irresponsible lending guidance. The irresponsible lending guidance update included a new provision which made it explicit which business practices the OFT consider to be deceitful or oppressive or otherwise unfair or improper.

Although debt collection is a part of everyday life and exists in economically rich and prosperous times, in the current economic climate debt collection activity can be regarded as being somewhat more evident but at the same time, rules do need to be adhered to.

Unfair debt collection practices as stated by the OFT’s Ray Watson do affect peoples lives but there is also the negative impact that those practices can have on the creditors brand.

If debt collection agencies and debt recovery firms use unfair or misleading practices, this can have an adverse effect on the reputation of the company the debt is owed to and there have been cases were money was legitimately owed but a judge has ruled in favour of the debtor and wiped the legitimate debt out only for the practices of the debt recovery firm.

At Corporate Credit Debt Recovery (CCDR) we act in our client’s interests in recovering debt and a big part of this is to show respect for your brand and its reputation.

Corporate Credit Debt Recovery provides services such as debtor tracing, ongoing business reports, commercial debt collection and debt recovery to a range of UK and EuroZone clients ranging from small to medium enterprises to large scale financial instution

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