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New OFT guide could become charter for debt avoidance

The OFT should highlight the obligations of consumers, as well as collectors, and not allow its new Guidance on debt collection to be used as a reference guide for debt avoidance.

The warning, from the Credit Services Association (CSA), follows concerns expressed by its Members that whilst it is correct for the industry and the OFT to work closely together in ensuring best practice – especially since it was the CSA that called for a review in the first place – the information and issues being raised were in a public document that could be used for nefarious means: 

“It is important that there is a statement from the OFT that clearly says how the Guidance is intended to be used, and how it is emphatically not a document for consumers and third party representatives to use as a debt avoidance tool,” says Claire Aynsley, Head of Membership, Compliance and Educational Services for the CSA and its sister body, the Debt Buyers and Sellers Group (DBSG).

“It is important also that everyone should work within the spirit of the Guidance, and it would be most helpful for that point to be stated clearly from the outset.”

In a 40-page response to the consultation, the CSA also expresses specific concerns over the need for tracing agencies to hold a consumer credit license (CCL): “The draft includes ‘tracing’ as a debt collection activity that therefore requires the tracing agent to hold the appropriate license and prove their competence according to current legislation,” Claire explains. 

“But this simply won’t work. The majority of tracing agents undertake no collection activities; no payments are received or negotiated, and as such how are they intended to prove their competence for an activity they do not do?”

The CSA also believes that specific mention should be made in the Guidance to the obligations of Credit Reference Agencies (CRAs) in terms of data accuracy: “We appreciate that CRAs are not responsible for the data which is uploaded to their systems,” Claire continues. 

“They should, however, have a responsibility for ensuring that the data then forwarded to a third party has undergone some form of ‘cleanse’ before supplying. This is crucial to avoiding ‘mis-trace’ issues further down the line, especially when a debt has been sold. It is not enough simply to state that some information supplied may not be accurate. That does not seem to be in the spirit of the new proposals.”

Members of the CSA account for more than 90 percent of the UK debt collection industry and are instructed to collect up to £20 billion each year. Its Members are also obliged to undertake more than 15 million ‘traces’ each year as a result of debtors who have ‘gone-away’.

 

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