MP slams debt collection firms for customer harassment

14/04/2009

Debt collectors should face tougher rules from the Office of Fair Trading (OFT) and should not harass debtors through using automatic diallers, an MP has said.

Speaking to the BBC, Andrew MacKinley said that debt collection firms were "pick[ing] on the most vulnerable".

In particular, the companies' practice of repeatedly calling debtors through automated machines was criticised by the Labour MP.

Mr MacKinley also pointed out that the debt collection firms were themselves sanctioned by large banks - which effectively "sold on" the problem customers.

"The banks are employing these companies in order that they can have denial," Credit Today reports him as saying. "In my view debts should not be sold. The law should be reviewed."

Kevin Still, EuroDebt director, said that he agreed with Mr MacKinley that there needed to be a tightening of the OFT Debt Collection guidance.

He added: "There should be a clear distinction between those people who face up to their debts and approach debt advice providers and those that refuse to acknowledge their debts. These calls must in the first instance be directed at the right person and that has given rise to a significant proportion of the complaints that the OFT and FOS (Financial Ombudsman Service) are dealing with. Cutting corners on verifying the information used should be clamped down on.

"Poor quality calls, often from call centres abroad, are unlikely to deliver any form of result for either the debtor or the creditor if the same message is delivered again and again without listening to what the consumer or their advisor is saying. On the issue of debt sale, this can often be beneficial to the debtor of the debt is bought by a member of the Debt Buyers and Sellers Group, who have their own code of conduct, and the circumstances behind the debt are know, so that the appropriate collection strategy is adopted. Debt are often purchased a very value in the pound, so a buyer may get a reasonable return on a debt from a reduced payment arrangement over a number of years."

The OFT is currently in the process of overhauling its guidance to debt collection firms.

This revamp comes as the economic downturn and rising unemployment threaten to worsen the debt burden of consumers.

In total, personal debts in the UK are thought to come to around £1.5 trillion.

Tags; Housing Debt and Bills, Credit Card Lifestyle,

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