When some creditors have difficulty collecting money they are owed, they turn the accounts over to a collection agency for help. This organization attempts to collect the debt, keeping a percentage of money collected as compensation for its services. The Office of Fair Trading (OFT) provides guidance to organizations attempting to recover debts from consumer hire or consumer credit agreements. In October 2011, the OFT updated its debt collection guidance and all entities that pursue debts related to consumer credit are expected to comply.
In association with the Credit Services Association/Debt Buyers and Sellers Group, the OFT provides guidance on the content, form, and use of debt collection letters. It also offers three pages of debt collection guidance for consumers. The information explains why a consumer may have been contacted by a debt collector and how the individual should deal with the collection agency.
The guidance also informs consumers of what they should expect from a debt collector. Among the expectations are making an introduction of who the collector and the firm are, what its role is, and why the individual is being contacted. Details regarding the debt, including the amount owed, should always be provided. At consumer request, a collection agency should provide additional details including information about the original credit agreement and any subsequent changes.
If a letter is issued by a debt collector, it should include details regarding who the agency is, why it is making contact, and an explanation of the legal process the firm can take to recoup money it is due. A debt collector is expected to contact a debtor at a reasonable time and never come into the home unless invited. All appointments should be scheduled and if the debtor asks the collector to leave the property, the collector should comply.
Unfortunately, not all collection agencies take this guidance seriously. Consumers in debt may find themselves receiving calls at all hours of the day and night and even on the receiving end of threats regarding debt repayment. By providing guidance on what a debt collector should not do, the OFT makes it easier for consumers to recognize whether they are being subjected to harassing behavior.
Unacceptable behavior includes harassing a debtor by making frequent calls, threatening gestures or statements, or pressuring the debtor to borrow money, or sell property. Also unacceptable are pressure to increase payments to more than the agreed amount or pay in large installments or in full. If debtors have a complaint about a debt collector, they should first try to resolve it with the relevant creditor.
If this approach proves unsuccessful, the OFT recommends contacting the Financial Ombudsman Service. This firm is an official and independent party that settles complaints between consumers and companies that offer them financial services. The Financial Ombudsman Service takes a technical approach to credit complaints including debt collection by a third-party agency. It considers factors like jurisdiction and perceived unfair behavior by a debt collector. The comprehensive assessment includes consideration of OFT guidance, industry codes of practice, and relevant law.