Debt collecion guidance UK

Helene Mueller
eCollect support team

Debt collection guidance in UK generally unifies the whole navigation scheme for legal and ethical debt collection within the borders of Great Britain. Debt collection is carried out by specialised and registered DCAs (Debt Collection Agencies). Generally they are acting as a third-party and aim to recover delinquent amounts on behalf of the original debt owner (creditor). In order the collection agency to provide legal debt recovery services and perform non-abusive actions against the debtor, a DCA has to comply and act according to UK laws and legislations. The main regulator in the United Kingdom is Fair Trading Act 1973, which established the wide-known OFT. The abbreviation “OFT” stands for the non-governmental department the Office of Fair Trading. As this organisation has been dissolved on 1st April 2014, its authorities have been transferred to several law regulators, such as the Financial Conduct Authority (ext. link 1). Debt recovery guidance is also available on the website of the Financial Ombudsman Service.

Control & governance of debt collection

According to UK laws, there are some actions, which debt recovery agencies are not allowed to perform during the default collection guidance. And there are actions, which they are legally authorised to use, when trying to recover a debt amount from a consumer on behalf of an original creditor. In accordance with the FCA, the FTA (Fair Trading Act) and the OFT, a debt collection agency or a creditor cannot:

  • contact the subject of debt at work without his specific permission;
  • contact the debtor via social networks (Facebook, Twitter, etc.);
  • contact the indebted subject outside the specified time-frame, which is 8am-9pm during working days. This time frame does not include weekends and holidays; reveal the matter of the call to a family member or an employer;
  • contact additional charges, which are not mentioned in the contract and are more that the percentage fees, marked in law texts (more than 8% according to the debt recovery guidance UK acts);
  • provide false or misleading information of any kind, e.g. about DCA’s name, false court actions, etc. The collection process has to be transparent and the information- clear; put pressure on subject of debt and harass him with marking impossible deadlines to settle the default amounts.

If a debt collection agency is licensed and registered, it cannot ignore the compliance with UK debt collection guidelines. Any improper practice is considered as a breach and is punishable by Great Britain’s laws. Due to UK’s regulators, a debt collection agency or a creditor has the right to perform the following actions, which are considered as legal and non-harassing:

  • Using tracing methods to locate the debtor;
  • Sending different oral and written reminders, making telephone calls, sending emails and letters, fax and text messages;
  • Sending letters of demand and letters before action, etc.;
  • Using bailiffs and debt solicitors to perform seizure of personal belongings;
  • Sending in-house agents to negotiate a convenient payment plan;
  • Proceeding to court actions, if the debt hasn’t been settled using only pre-legal proceedings.
  • There are other regulators for debt collection guidance and practices in UK as well: the Consumer Credit Act, the Credit Services Association, the Competition Markets Authority, the Late Payment of Commercial Debts (Interest Act), the Limitation Act 1980, the Consumer Protection from Unfair Trading Regulations; and others.

OFT – mission and purpose

Main mission and purpose of the Office of Fair Trading is to raise awareness against unfair practices, scams and deceptive schemes, as this will protect not only the debtors, but the creditors and DCAs as well. OFT is a regulator with which the collection agencies have to comply. This organisation does not only provide OFT Debt Collection Guidance section for DCAs, but also protects UK debtor’s rights as a consumer, ensuring fair debt collection and debt recovery services. In order the DCA to be recognised as legal, it has to comply with the OFT rules and regulations. The Office of Fair Trading ensures not only legal and up-to-date debt collection guidance, but also:

  • provides consumers (debtors) and creditors with thorough information about their rights (the so-called Consumer Protection Regulations-CRP; and Unfair Terms of Consumer Contract Regulations- UTCCR)
  • specifies unfair practices and terms of creditors or collection agencies- unethical, harassing or criminal
  • offers legal advise for consumers (subject of debt)
  • offers business guidance for commercial debt recovery
  • offers debt collection guidance for consumer debt recovery, etc.

The Office of Fair Trading has the legal right to apply different financial penalties to businesses (not only in the debt collection sphere but in other various sectors as well), which breached the competition rules, pointed in the OFT debt collection guidance.

Used literature & external links

Debt collection guidance response from Citizens Advice to the Office of Fair Trading