OFT issues new practices for debt collection

The Office of Fair Trading (OFT), the trading watchdog, has set out a range of measures that aim to stamp out unfair debt collection practices and give new guidance to debt collector, debt recovery agencies and others involved in the debt recovery / collection industry.

The OFT in drawing up the new debt collection guidance is making it absolutely clear that its rules will apply to all businesses involved with any aspect of debt recovery, and is to include lenders and debt buyers to debt collection firms, law firms and tracing agents. It also stressed the responsibility creditors have to ensure that the information they pass on (and have passed on) to debt collection agencies and debt buyer is accurate.

Under the new guidance 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, was quoted as saying: “Unfair debt collection practices can have a real impact on consumers’ lives, so it is vital that we identify and root out unacceptable behaviour…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 guidance has been widely applauded, as whilst debt collection have many obligations, they can only act on the instructions given by creditors and if that data is inaccurate, as many complaints to the OFT can attest to, then the new guidance places that responsibility firmly with the creditor to ensure that debt collection agencies are contacting the right people about the right debt.

CCDR is a leading UK Debt Recovery specialist with international reach and a client base of SME’s and multinational organisations. Our services include:  Debt Recovery, Debt Mediation & Dispute Resolution, Business Reports and Debtor Tracing, Outsourced Credit Control and Corporate Legal Services.

For more details, call our Liverpool head office or use the Contact Us section of the site.

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