OFT Guidance for Debt Collectors Pt 2

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Charging for debt collection

 

2.9 Charges should not be levied unfairly.

 

2.10 Examples of unfair practices are as follows:

 

a. claiming collection costs from a debtor in the absence of express contractual or other legal provision

 

b. misleading debtors into believing they are legally liable to pay collection charges when this is not the case, e.g. when there is no contractual provision

 

c. not giving an indication in credit agreements of the amount of any charges payable on default

 

d. applying unreasonable charges, e.g. charges not based on actual and necessary costs

 

e. applying charges which are disproportionate to the main debt.

 

Debt collection visits

 

2.11 Those visiting debtors must not act in an unclear or threatening manner.

 

2.12 Examples of unfair practices are:

 

a. not making the purpose of any proposed visit clear, e.g. merely stating that collectors or field agents will call is not sufficient

 

b. visiting a debtor when it is known they are vulnerable, e.g. when a doctor's certificate has been provided stating that the debtor is ill

 

c. continuing with a visit when it becomes apparent that the debtor is distressed or otherwise vulnerable, e.g. it becomes apparent that the debtor has mental health problems

 

d. entering a property uninvited

 

e. not leaving a property when asked to

 

f. visiting or threatening to visit debtors without prior agreement when the debt is deadlocked or disputed

 

g. not giving adequate notice of the time and date of a visit

 

h. visiting debtors, unless requested, at inappropriate locations such as work or hospital.

 

Statute barred debt

 

2.13 This guidance applies to the pursuit of debt regardless of its age. We will be carrying out further work on this aspect of debt recovery including analysis of relevant legislation and practice throughout the UK.

 

2.14 In the past we have dealt with a number of statute barred debt cases governed by the Limitation Act 1980, which applies to England and Wales. Based on that experience our position with regard to England and Wales remains:

 

a. we accept legally the debt exists

 

b. it is the methods by which the debt is collected that can be unfair as follows:

 

• it is unfair to pursue the debt if the debtor has heard nothing from the creditor during the relevant limitation period

 

• if a creditor has been in regular contact with a debtor before the debt is statute barred, then we do not consider it unfair to continue to attempt to recover the debt

 

• it is unfair to mislead debtors as to their rights and obligations, e.g. falsely stating or implying that the debt is still legally recoverable and relying on consumers not knowing the relevant legal provisions, and

 

• continuing to press for payment after a debtor has stated that they will not be paying a debt because it is statute barred could amount to harassment contrary to section 40 (1) of the Administration of Justice Act 1970

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