This note is about complaints to do with debt collecting. This is where a third-party debt-collection agency (one that is separate and distinct from the original lender) has been employed to recover a debt. It does not cover complaints where the lender itself is acting to collect a debt owed to it.
Debt collectors are licensed by the Office of Fair Trading and are employed by all sorts of organisations to collect debts owed for a range of things – from rent arrears and utility bills, to unpaid parking charges and trade debts. They are sometimes also known as credit-collection agents or debt-recovery agents.
We can only consider complaints about debt collectors where the complaint is about problems during an attempt to collect a debt that originates from a regulated consumer-credit or consumer-hire contract.
When we look at a complaint about debt collecting, we need to ask a number of questions to establish whether the complaint is one that we can consider or not.
We can only deal with complaints about the collection of debts arising from a regulated consumer-credit or consumer-hire agreement. This means that we cannot deal with complaints about the collection of debts such as:
Where consumers are concerned about issues relating to the collection of debts like these, we usually refer them to Citizens Advice.
Our rules allow us to deal with a complaint brought by someone that the debt collector has sought to recover payment from, under a regulated consumer-credit or consumer-hire agreement. The relevant rules are set out in the FCA Handbook (DISP 2.7.6).
So if the complaint is about debt collecting, and the person complaining has been asked to make payment, we can deal with the complaint.
That also means that, if the debt collector is not actually seeking payment from the consumer, we cannot generally consider a complaint from that person. So, for example, a consumer who simply receives a letter or telephone call from a debt collector intended for a previous resident at their address cannot normally complain to us about receiving the communication.
But the position may be different where the debt collector, knowing that the person owing the debt no longer lives at an address, continues to communicate with the consumer in a way that suggests indirect pressure on the consumer to pay the debt. We most frequently see this in complaints where:
Debt collectors are sometimes employed by lenders and hirers simply to trace a consumer – the original lender or hirer will then itself seek repayment of the debt. We can deal with a complaint relating to tracing activity by a debt collector if:
Debt collecting falls within our consumer credit jurisdiction. We are able to look at complaints about events that happened from 6 April 2007, the date consumer credit businesses came under our jurisdiction. This jurisdiction is not retrospective, so we cannot look at complaints about events that occurred before that date.
It is the date of the event complained about which is important, not the date that the credit or hire agreement was entered into.
It may sometimes be appropriate to register a complaint against the lender or hirer, rather than the debt collector who is working for them and is asking the consumer to pay.
This might be the case, for example, where the complaint is about something which was the responsibility of the lender – such as the sale of payment protection insurance (PPI) or application of late-payment charges.
When we deal with complaints about debt collectors, we take account of the relevant guidance produced by the Office of Fair Trading as well as any relevant law. We also consider the overall facts and circumstances of the complaint, to arrive at a fair outcome for that case.
Although cases are considered individually, there are some typical issues that come up frequently in the cases that we see. This section explains the approach we usually take.
If the wrong person is being asked to pay the debt (for example, a family member) – or if there has been a "mis-trace" by the debt collector and they are seeking payment from the wrong person – we can deal with a complaint from the consumer who is being asked to pay.
A "mis-trace" is where a debt collector has contacted an unconnected person about paying the debt. In the cases that we see, this is often someone with the same (or a very similar) name as the true borrower or hirer, or someone who lives at a previous address of the borrower or hirer.
We would expect a debt collector to provide evidence to support a claim that they are seeking repayment from the correct person. It would not be enough to say, for example, that the person has the same name as the borrower or hirer, or even the same name and date of birth. We would look for some additional, convincing reason to link the person to the debt.
Once we have considered the evidence that the consumer and the debt collector have provided we will decide, on the balance of probabilities, whether or not we consider the consumer is the person that owes the debt.
Some of the cases we see involve consumers who have become aware that they are being pursued for a debt through messages left by the debt collector with neighbours. We can deal with a complaint from anyone from whom debt collectors have requested payment. So we could deal with a complaint from a traced consumer if they had been asked to repay the debt through messages left with neighbours – but could not normally consider a complaint from the neighbours who had been asked to relay the message, unless they themselves had been asked (or pressured in some way) by the debt collector to repay the debt.
Emotions can run high where a consumer is being asked to pay a debt which they say does not belong to them. Where we decide that a debt collector has wrongly pursued a consumer for payment of a debt they do not owe, then we will generally award a payment to reflect any distress or inconvenience that the consumer has been caused by the debt collector’s mistake. The amount of the award would be individually assessed, in the light of the particular facts of the case.
We often receive complaints where the amount of the debt is in dispute. For example, where the consumer says that:
We will normally ask the debt collector to provide information to show what is properly due. If the debt collector relied on a figure provided to it by the lender or hirer then we will normally expect the debt collector to obtain the necessary breakdown of the figure from their principal, to support their case. The debt collector will usually already have had to obtain that, in order to consider the consumer’s complaint before the matter was brought to us.
If a lender or hire business has previously agreed a reduced settlement with the consumer, we would not normally expect it subsequently to instruct a debt collector to recover the full balance – or a debt collector to attempt to recover the larger amount, once it has been shown evidence of the settlement agreement.
Many of the complaints we receive about debt collecting concern the approach the debt collector has taken in its communications with the consumer, or how it has reacted to the consumer’s repayment proposals.
Typically, the consumer may say that the debt collector has been over-zealous in the number or tone of its communications – perhaps alleging harassment in some cases. Or the consumer may say that the debt collector has rejected their proposals out of hand, or is unwilling to be sufficiently flexible.
When we consider whether or not a debt collector has behaved fairly, we will look carefully at the communication there has been between the consumer and the debt collector. That might include looking at, for example, copy correspondence, recordings or dialler logs of telephone calls, and notes of visits.
Our assessment of the case will take account, where relevant, of the regulator’s guidance, the law and industry codes of practice. We will always make our assessment in the light of the particular facts and circumstances of the case, so as to be sure to arrive at a fair outcome for the case.
Provided that the debt collector’s approaches are fair, we would expect the consumer to engage reasonably with the debt collector to discuss how the debt might be repaid. It will not generally be helpful if, for example, the debt collector insists on having the debt repaid in full immediately or if the consumer refuses to consider making any payment at all.
It is not unusual for lenders to “sell” a consumer credit debt on to another lender, or to the business that has been trying to collect the debt of their behalf. The name sometimes given to this process is assignment.
Consumers are entitled to be told when their debt is assigned, though in some of the cases that we see this has not been clearly explained to the consumer and this can lead to administrative confusion and problems.
In general terms, the new owner of the debt takes over the same rights and responsibilities as the original owner had – and this is reflected in the way that we will deal with complaints that are brought to us by consumers whose debts have been sold. So, for example, we would expect the lender to provide the same quality of evidence to support their case – whether they were the original lender, or one to whom the debt had later been assigned.
We sometimes see complaints where the consumer (or their representative) says that a debt cannot be legally enforced, perhaps saying that:
The consumer may seek a declaration from us that the debt is legally unenforceable. Although we will decide what we think is fair and reasonable in the individual circumstances of the case, we have no standing to declare an agreement as legally enforceable or otherwise. Where there is a dispute about the legal enforceability of an agreement, that is normally for a Court to decide.
We are frequently able to settle complaints against debt collectors by informal agreement, which – if we find that the debt collector has done something wrong – may involve a payment of compensation for distress and inconvenience caused.
In some of the cases that we see, the consumer hopes to have their debt written off in settlement of their complaint of unfair behaviour by the debt collector – or believes that that is the limit of what they could ever receive. But writing off the debt is not necessarily an appropriate outcome and it is more often the case that we will recommend a suitable amount of compensation – which we will assess individually in the light of what has happened, and the actual effect on the consumer, so as to be sure that it is fair. So, compensation will not necessarily mirror the amount of the debt; it could be less, or it could be more.
Sometimes, we will decide that the compensation should be used in reduction of the consumer’s debt. In other cases, we will decide that it should be paid direct to the consumer – depending on what we consider more appropriate for that case.
Not every settlement will involve a payment of compensation. We might, for example, direct the debt collector to accept a reasonable offer of payment made by the consumer.
contact our technical advice desk on 020 7964 1400
This is part of our information helpdesk which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.