Facing debt collectors? You have rights.

By Matthew Plant

Old Bailey - Image © iStockPhoto

Borrowers have rights. When debt collectors come to collect the money someone owes, they have to follow rules that lay down how they can do that. A press release from the OFT (Office of Fair Trading) tells us more.

Basically, the OFT is reminding / warning debt collectors that they need to make sure their communications are 'fair and clear' - and that they don't mislead borrowers.

Debt collectors who don't comply with the rules could actually have their consumer credit licence revoked. It's actually a criminal offence to 'trade in credit activities' without a credit licence, so this really stresses how important it is for companies to obey the rules.

The OFT issued its warning after a debt collection agency lost its licence. When the company appealed against the OFT's decision, the First-tier Tribunal found the following:

• The company didn't actually have the 'skills, knowledge and experience' to be a consumer debt collector.
• It didn't have the 'practices and procedures' to make sure it dealt with borrowers in the right way.
• Its payment demand letter looked like a legal / official document (something which is against the guidance issued by the OFT).
• The company's managing director told borrowers he was a lawyer - and that's an example of misleading people.
• It was 'persistently obstructive' in the way it handled enquiries - not just from the OFT, but from Trading Standards as well.

"This decision reinforces the need for licensed debt collection businesses to comply with the relevant OFT guidance, otherwise they risk losing their licences," said OFT Director of Consumer Credit, David Fisher.

"These businesses need to treat consumers fairly and be clear in all communications, providing accurate information that does not have the effect of misleading consumers."

If you've been contacted by a debt collector - or you're simply wondering how the rules work and how they protect ordinary people - click here to see the OFT's guidance.

Related resources:

• OFT (Office of Fair Trading)

• 'Communicate clearly and fairly' OFT warns consumer credit businesses. Tribunal upholds OFT decision to revoke consumer credit licence

• Talking to debt collectors

• OFT Debt Collector guidance [PDF]

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Tags: debt collection, debt, debts, rights, fair, OFT, debt collectors, OFT guidance, PDF, press release

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