OFT takes action against unfair debt recovery practices
122/10 23 November 2010
The OFT has imposed requirements on debt recovery company Aktiv Kapital to secure improvements to its debt collection and communication practices.
An OFT investigation found that Aktiv Kapital had been chasing people for disputed debts without properly investigating the issues in dispute, in breach of the OFT's debt collection guidance. The investigation also found that those being chased felt unreasonably pressurised by Aktiv Kapital.
Although Aktiv Kapital has taken action to address the practices that concerned the OFT, requirements have been imposed to ensure that future conduct of the same or a similar kind does not occur.
The wrong person being pursued for a debt is a common theme in complaints about the debt collection industry received by the OFT. This is often rooted in inaccurate or incomplete data being passed on by the owner of the debt when a debt is sold or its collection is sub-contracted.
The requirements imposed set out that Aktiv Kapital must:
- not pursue debts where it has been notified in writing that the debt is disputed until the dispute has been properly investigated - this includes cases where the person being chased for payment says that they are not the debtor in question
- ensure that its communications are not, or do not appear to be, threatening or to constitute unreasonable pressure
- deal sensitively with particularly vulnerable customers.
Ray Watson, Director of the OFT's Consumer Credit Group, said:
'We have taken action against Aktiv Kapital to address unsatisfactory practices and protect vulnerable consumers. Requirements have been imposed to ensure that these practices are not repeated'.
- See the requirements imposed on Aktiv Kapital (pdf 49kb).
- Failure to comply with these requirements could lead to a fine of up to £50,000 per breach or to action by the OFT to revoke the company's credit licence.
- Aktiv Kapital is part of a group of debt recovery companies based in Norway, which operates across Europe and Canada. The UK arm, based in Bromley, is one of the larger UK debt collection/purchase companies and operates across the country.
- The OFT's Debt collection guidance (pdf 116kb) sets out minimum standards that all licence holders involved in debt recovery must adhere to in order to be considered fit to hold a consumer credit licence.
- The OFT's Irresponsible lending guidance (pdf 867kb) sets out at Chapter 7 what the OFT considers to be valid grounds for disputing a debt.
- The OFT issued a Minded to Impose Requirements notice to Aktiv Kapital on 9 July 2009. The decision to impose the requirements was made on 27 October 2010. Aktiv Kapital can appeal the decision to impose the requirements to the First Tier Tribunal (Consumer Credit). In this case the appeal period has not yet elapsed.
- The Consumer Credit Act 1974 (the Act) requires most businesses offering credit, lending money or involved in activities relating to credit or hire to be licensed by the OFT.
- For advice on dealing with debt, see the Directgov website.
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