Debt Collectors Facing Clampdown
We’ve discussed already in this Debtsolver blog, the issues surrounding the mis-selling of debt repayment insurance, currently under investigation by the Office of Fair Trading (OFT). Another scandal that’s facing the UK, involves the murky practices surrounding the behaviour of some debt collectors.
Independent debt collectors are sometimes contracted by creditors, in order to recover bad debt from clients. Since personal debt in the UK exceeded the £ 1 trillion pound mark, attention is increasingly being focused on the issues faced by individuals in debt, and the many companies and services that have sprung up to deal with them. The number of licensed debt collectors has doubled in the last two years,
A recent study by the UK’s consumer watchdog, the OFT, looked at the working practices of licensed debt collectors, acting on behalf of creditors to pursue loan repayments. After a series of interest rate rises and a lull in the property market, more and more people find themselves unable to keep up with their credit card, bank loan or mortgage repayments, and are having to face the uncomfortable prospect of being visited by a debt collector. If such visits were not distressing enough, the OFT has claimed that some debt collectors were overcharging debtors/clients, misinforming them as to their rights, and that some were even threatening clients.
The OFT has issued guidance and good practices advice to debt collectors, and in 2003 looked at how these were being complied with. Unfortunately, they found evidence that in some cases, these were not being adhered to, and indeed, nearly 80 warning letters have been written, and 12 licenses have been revoked or turned down since July 2003.
The OFT has carried out a review of practices by debt collectors, and has said it would issue its report in the spring of 2006.
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