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Debt Collection Agencies Criticised | |||||
| The number of consumers who complain they are being hounded by debt collection agencies has risen sharply, Office of Fair Trading figures show. The OFT, which regulates consumer credit, is scrutinising whether debt collection agencies are meeting its minimum standards of conduct. It said it received 670 complaints about debt collectors in the first half of 2005, up from 400 in the first half of 2004. The OFT will report its findings in the spring. The rise in complaints comes as consumer debt has soared to record levels, with more people struggling to repay their loans. Total personal debt is put at £1,113bn, one-fifth of which is unsecured. Grant Thornton, the financial adviser, predicts that 20,000 people will declare themselves insolvent in the first three months of 2006, the highest quarterly figure since personal debt records began 45 years ago. The number of consumers in financial difficulty has meant that more banks and credit card companies are passing unpaid loans to debt collection agencies, which try to recover the outstanding debt. The Credit Services Association, which represents debt collection agencies, said the amount of debt both consumer and commercial outsourced by banks to debt collection agencies had risen from £3bn in 2001 to £5bn in 2003, according to the latest figures. Kurt Obermaier, executive director of the association, estimated the amount had risen by up to 20% since then. Debt collection agencies are expected to take on more work. The Child Support Agency, the government department, triggered controversy this week when it announced that private debt collectors were to be given the job of recovering child maintenance arrears from absent fathers. The Banking Codes Standards Board, which operates a voluntary code for the banking industry, is also investigating debt collection agencies and is due to publish its results soon. Under the code, institutions must deal with debtors fairly. Mr. Obermaier said there were about 500 debt collection agencies but only half were members of the Credit Services Association, which operates a code of conduct and complaints procedure. He said: It is true that some collectors are not as sympathetic to consumers as they might be. We have been addressing this with our members and are very reactive to complaints. However this has always been an issue with work of this nature and always will be. It is easy to set yourself up as a debt collector. Charities that help indebted consumers say the behaviour of some debt collection agencies has always been an issue. The National Citizens Advice Bureaux said it got reports of some cases of aggressive behaviour and atrocious cases . Meg van Rooyen, information officer at National Debtline, said: The main problem is that when a creditor passes a debt to a collector they often dont pass on a history of the debt. If customers have made an offer sometimes debt is passed to a collector who doesnt know an offer has been made. For this and other news items please visit www.debtscotland.com . By registering on the site you will find a host of debt recovery and credit control tools in the free credit resources section. Stephen Cowan Yuill & Kyle, debt recovery & credit control lawyers, Scotland 79 West Regent Street, Glasgow G2 2AR scowan@yuill-kyle.co.uk Direct Dial: 0141-572-4251 www.debtscotland.com www.ykcreditcheck.co.uk | |||||
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