Debt collection is a regulated activity that takes place when a creditor has engaged an external company to recover payments that are past due.
We can only look at events relating to debt collecting that occurred on or after 6 April 2007.
That's because 6 April 2007 is when our jurisdiction to look at these types of complaints began.
Before 1 April 2014, we could only look at debt collecting complaints about regulated credit or hire agreements. But from 1 April 2014, we can look at debt collecting in relation to credit and hire agreements including regulated and exempt agreements and peer to peer lending. This includes bank accounts, loans, credit cards but wouldn't include:
- council tax
- utility bills
- court fines
- mobile phone contracts
We can also look at certain complaints where a lender/debt owner is directly seeking to recover payment from a customer. However, even if the lender/debt owner has employed a third-party debt collector, it might still be necessary to set up a complaint against them. This might be because they’re responsible for something else, like the advice or sale of an agreement, charges applied or other activity that took place before the debt collectors’ involvement.
If the complaint is about debt collecting, and the person complaining is the person who has been asked to make payment, we can typically deal with the complaint.
If the debt collector isn't actually seeking payment from the customer, we won’t usually be able to help. So for example, if a customer gets a letter or telephone call from a debt collector intended for a previous resident at their address, they’re unlikely to be able to complain to us about receiving the communication. However, there might be situations where we can look at things for the consumer. If you’re unsure you can discuss this with our technical desk.
Types of complaints we see
The customer says they're not the person who owes the debt
We deal with complaints from customers who say the wrong person is being asked to pay the debt. This could be:
- a family member
- if there has been a ‘mis-trace’ by the debt collector
A mis-trace is where a business has contacted an unconnected person about paying the debt. In the cases that we see, this is usually someone:
- with the same (or a very similar) name as the actual borrower or hirer
- who now lives at a previous address of the borrower or hirer
We’ll ask the business to give evidence to show that they’re seeking repayment from the correct person. That might include them going back to the original lender for a copy of the original agreement and any notes about the account. They may have information about where payments toward the debt had come from which we can review to see if they match the customer’s account. We can also look at any tracing activity that has taken place, and the steps the business took to check they were pursuing the correct person for the debt.
Once we've considered the evidence from both sides, we’ll make a decision about whether the business is justified in chasing the customer for the debt.
The customer doesn't agree with the way the debt has been calculated
We get complaints where the amount of the debt is in dispute. The customer might say that:
- some of the payments they've made haven’t been properly taken into account
- the debt has been made larger by unexpected interest or charges
- the business hasn't honored a concessionary settlement figure that had previously been agreed
We’ll ask the consumer for evidence of what has been paid or agreed and we’ll also ask the business to show the debt is the right amount. If a debt collector relied on a figure they were given by the lender, then we’d usually expect the debt collector to ask for a breakdown of the figure to support their case. We’d also expect to see the underlying credit agreement to check that any charges have been applied in line with this.
If a business has previously agreed a reduced settlement with the consumer, we wouldn’t usually expect it to then:
- ask a debt collector to recover the full balance
- try to recover the larger amount once they had been shown evidence of the settlement agreement
The consumer believes they haven’t been treated fairly
We get complaints about the way a business has communicated with the consumer.
Consumers may say a business asking for repayment has:
- contacted them too many times
- been unreasonable in the tone of its communications
- harassed them
- rejected their repayment proposals or not taken their financial difficulties into account
When we consider whether a business has behaved fairly, we’ll look carefully at the communication between it and the consumer. That might include looking at correspondence, call logs, and notes of visits.
We’d also consider whether the business has acted positively and sympathetically to any financial trouble the consumer might have been going through. We’ll consider whether the business and the consumer have been willing to engage with each other in a reasonable way to discuss repaying the debt. It might not be constructive for the business to insist that the debt is repaid in full immediately – or for the consumer to refuse to make any payment at all.
The consumer is unhappy that the debt has been sold to someone else
It isn't unusual for lenders to ‘sell’ a debt on to another lender – or to the business that has been trying to collect the debt on their behalf. The name sometimes given to this process is assignment.
Consumers are entitled to be told when their debt is assigned. But in some of the cases we see, the situation hasn't been clearly explained to the consumer, which leads to confusion and problems.
The new owner of the debt usually takes over the same rights and responsibilities as the original owner. This is reflected in the way that we will deal with complaints from consumers whose debts have been sold. For example, we’d expect the business to give the same quality of evidence to support their case – whether they were the original lender or one who had later been assigned the debt.
The consumer says the debt is not enforceable or statute barred
Consumers (or their representatives) sometimes tell us that a debt can't be legally enforced. This might be because:
- there are mistakes in the credit or hire agreement
- the debt collector hasn’t been able to produce a ‘true’ copy of the signed credit or hire agreement
The consumer may seek a declaration from us that the debt is legally unenforceable. Although we'll decide what we think is fair and reasonable in the individual circumstances, we have no power to declare an agreement as legally enforceable or otherwise. This is usually for a Court to decide.
If the consumer brings a complaint to us saying the debt is statute barred (which means brought outside the time limits applied by courts under the Limitation Act 1980, or The Prescriptions and Limitation (Scotland) Act, 1973 in Scotland) we take a similar approach – we don’t decide whether it’s statute barred or not, but we can look at whether the business is acting fairly. We might find that a debt collector hasn’t acted fairly if it has asked a customer to pay a debt that a court would consider statute barred.
What we look at
When we deal with complaints about businesses asking for repayment of a debt, we look at each case individually to find a fair outcome for that particular situation.
We take account of:
- the relevant rules and guidance produced by the regulator
- any relevant law and industry good practice
- the overall facts and circumstances of the complaint
Much of the previous Office of Fair Trading's guidance on this topic is now found in the FCA's Consumer Credit Sourcebook (CONC) for businesses authorised on or after 1 April 2014.
Handling a complaint like this
We only look at complaints that you've had a chance to look at first. If a consumer complains and you don't respond within the time limits or they disagree with your response, then they can come to us.
Putting things right
If we find the business has done something wrong or not treated a consumer fairly, we can tell it what to do to resolve the complaint. This could be changing the amount the consumer owes or paying compensation for what has happened.
What we ask a business to do, and the amount of compensation we ask it to pay would depend on the particular facts of the case.