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Press releases 2002 -

OFT warns debt collectors about unfair practices

PN 82/02     28 November 2002

The OFT has warned those involved in debt collection that failure to deal fairly and openly with consumers will jeopardise their consumer credit licences. The warning comes with the publication of draft revised guidance aimed at the sector.

Download debt collection guidance for consumer credit licence holders and applicants in pdf format (104kb).

Apart from the motor trade, debt collection activity attracts the largest number of licensing complaints to the OFT and subsequent licensing action. The new guidance is open to consultation and specifies some additional examples of unfair practices such as:

  • pursuing third parties such as relatives of deceased debtors
  • obtaining details under false pretences
  • falsely claiming a right of entry to seize goods
  • disregarding claims that debts have been settled or are disputed.

The guidance is aimed at helping debt collectors understand what type of behaviour is likely to lead to action being taken by the OFT to refuse or remove a licence. The guidance will also enable the OFT to take speedier action against those engaging in unfair practices. The guidance has been drafted to reflect casework experience such as:

  • a debt collection agency that contacted a debtor 28 times in one day
  • a debt collection agency who threatened to seize a couple's posessions for a debt owed by their son
  • a debt collector who failed to pass money on
  • a debt collection agency that intimidated a disabled man into abandoning his agreed payment schedule.

Announcing the new guidance John Vickers, Director General of Fair Trading, said:

'Those in debt can be some of the most vulnerable consumers. It is essential that debt collectors carry out their business fairly. Businesses that fail to do so could lose their credit licence.'

The guidance will apply to all consumer credit licence holders and applicants involved in debt collection activity - either directly or indirectly including those who employ third party collectors.

Examples of unfair practices set out in the guidance include:

  • using official-looking documents intended to resemble court summonses
  • falsely claiming to be bailiffs (or in Scotland sheriff's officers or messengers in arms)
  • misleading debtors over liability for collection charges
  • refusing to deal with appointed third parties such as Citizens Advice Bureaux.

The consultation period is 12 weeks and the OFT aims to publish the final guidance by April 2003.


1. Under the Consumer Credit Act 1974, businesses that offer consumer credit or hire must have a consumer credit licence. The OFT has a duty to protect the interests of consumers by monitoring the fitness of applicants and licence holders.

2. In considering fitness the OFT will take into account a number of factors including:

  • any offence or conviction of violence or dishonesty carried out by the business or anyone involved in running the business
  • failure to comply with the provisions of the Consumer Credit Act or other consumer protection legislation
  • consumer complaints and evidence of unfair business practices
  • evidence of discrimination on grounds of sex, colour, race or ethnic/national origin.

3. The OFT draft guidance on debt collection is available to download in pdf format (104 kb).

4. Deadline for comments is 21 February 2003. Submissions should be made to Pauline McAcree at the OFT, Fleetbank House, 2-6 Salisbury Square, London, EC4Y 8JX.

5. The OFT issued general consumer credit licence guidance for holders and applicants in February 2001. It contains guidance on debt collection. The current consultation expands and clarifies that guidance and gives examples.

Download consumer credit licences guidance for holders and applicants in pdf format (37 kb).

6. The OFT will issue further sector specific guidance for sectors where particular problems have been identified.

7. In this press release the functions of the Director General of Fair Trading (DGFT) under the Act are for simplicity described as the functions of 'the OFT'. The Enterprise Act will replace the office of the DGFT with the OFT, to which the will be transferred DGFT's functions.

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