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44/09 21 April 2009
The Office of Fair Trading has taken action against Mackenzie Hall Ltd, a debt collection company, requiring it to improve its practices.
Download Mackenzie Hall requirements (pdf 47 kb).
The OFT has used its powers under consumer credit legislation to impose 'requirements' on Mackenzie Hall after an investigation found that some of its business processes failed to meet satisfactory standards. As a result of these requirements, Mackenzie Hall must not:
Failure to comply with a requirement could lead to a fine of up to £50,000 and/or possible revocation of Mackenzie Hall's consumer credit licence.
Following an application by the company to renew its existing consumer credit licence, the OFT carried out an in-depth investigation into Mackenzie Hall's business practices and procedures, including a visit to its offices. The investigation found that whilst the company's procedures were of a satisfactory standard, complaint evidence received by the OFT showed that some of these procedures were not always followed.
The OFT raised its concerns with Mackenzie Hall and confirmed that it would be looking to impose requirements to improve compliance. Mackenzie Hall acknowledged the problems and, as allowed under the Consumer Credit Act 1974, made a proposal to address the OFT's concerns.
Ray Watson, OFT Director for Consumer Credit, said:
'Persisting with debt collection activity when debts are in dispute can give rise to significant consumer detriment, particularly where vulnerable consumers are involved.'
'In this case Mackenzie Hall has co-operated fully with the OFT and has taken steps to ensure that the business follows correct procedures for handling disputed and statute barred debts.'
'We will continue to use our licensing powers to take action to protect consumers where debt collectors fail to ensure full compliance with our guidance.'
1. The Consumer Credit Act 1974 (the Act) requires debt collectors, businesses that offer goods or services on credit and/or are involved in activities relating to credit or hire, to be licensed by the OFT.
2. In 2003 the OFT issued the Debt Collection Guidance (updated December 2006) which sets out minimum standards for those intending to collect debts. Failure to comply with the Debt Collection Guidance may call into question the fitness of a business to hold a consumer credit licence.
3. Following implementation of the OFT's new powers under the Consumer Credit Act 2006 on 6 April 2008, where the OFT is dissatisfied with any matter in connection with a business, a proposal to carry on a business or any other conduct by a licensee, associate or former associate, the OFT may impose 'requirements' on the licensed business. Requirements may require a business to do or not to do (or to cease doing) anything specified for the purposes connected with addressing the OFT's dissatisfaction, or securing that matters of the same or a similar kind do not arise.
4. Two different processes exist for imposition of requirements. One is where an adjudicating officer issues a notice to the trader that the OFT is minded to impose requirements to address dissatisfaction. The trader is then given the opportunity to make representations to the adjudicating officer. The adjudicating officer makes a determination and the trader has the right of appeal against the determination to the Consumer Credit Appeals Tribunal. Alternatively, a business may offer a proposal to address the OFT's dissatisfaction pursuant to section 33D(4) of the Act. In these circumstances the OFT is not required to issue a notice that it is minded to impose requirements if the proposed determination is in the same terms as the proposal made by the business.
5. The fact that requirements have been imposed on Mackenzie Hall appears on the consumer credit register. We will monitor Mackenzie Hall's compliance with the requirements. Any complaints about non-compliance should be sent to:
Office of Fair Trading
2-6 Salisbury Square
6. Under the Limitation Act 1980, which applies to England and Wales, a debt is considered to be statute barred when no payments have been made against it or where it has not been acknowledged for six years. A statute barred debt cannot be legally recovered. Whilst the OFT accepts that the debt still exists, the OFT considers that it can be unfair to pursue the debt in the circumstances set out in our Debt Collection Guidance (pdf 116 kb). In Northern Ireland, statue barred debts are governed by the Limitation (Northern Ireland) Order 1989. In Scotland, statute barred debts are governed by the Prescription and Limitation (Scotland) Act 1973 which states that the debt itself ceases to exist after five years providing that it has not been acknowledged and that no relevant claim against it has been made by the creditor.
7. The OFT's advice for those being pursued by debt collectors is: don't panic or ignore the problem, seek help and advice from your nearest Citizens Advice Bureau and contact those who you owe money to as soon as possible.
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