OFT: 'Communicate clearly and fairly' OFT warns consumer credit businesses. Tribunal upholds OFT decision to revoke consumer credit licence

The OFT is warning companies (debt collectors) that collect consumer credit debts to make sure they communicate clearly and fairly and do not mislead consumers after a Tribunal found a business unfit to hold a consumer credit licence.

The First-tier Tribunal upheld the OFT's decision to revoke the consumer credit licence of Carltons Business Limited, a debt collection agency based in Dartford, Kent.

In the case of Carltons Debt Collectors the Tribunal found that;

• they lacked sufficient skills, knowledge and experience to operate a consumer debt collection business
• they did not have practices or procedures to deal fairly and properly with consumers
• the payment demand letter was designed to look like an official or legal document, which is against OFT guidance
• the managing director's decision to describe himself to debtors as a lawyer was intended to create a misleading impression
• they were  persistently obstructive in dealing with enquiries from the OFT and Trading Standards.

How many other individuals of firms are also up to these tricks?

Glad to see that the OFT is now shifting into gear and looking more closely at the way debt collectors operate in the UK, and in my opinion, not before time.

I raised my concerns about the practices of some debt collectors last year to Nigel Cates, the deputy director of the OFT’s consumer credit group, and I am pleased that he was actually listening. He did say, on the QT, that this was an area they were going to look at.

Debt collectors have to adhere to a code of practice which was last updated in 2006. In my view it is being twisted and pulled around in favour of the debt collector to the detriment of the debtor and it needs a major revamp. You can read the latest code here – OFT Debt Collection Guidance

The Tribunal ruling is a clear signal that any unprofessional activity by debt collectors will not be tolerated and that they have to be clear and transparent in their dealings and no longer place debtors under undue pressure.

This tough stance from the OFT and the Tribunal is all very well but if it continues to be rigorously applied right across the industry then I can’t see many firms being left to collect debts!

Don’t forget the old saying, ‘he who shouts the loudest gets paid’ and I don’t know of many mild and cheerful debt collectors that make you feel good and refreshed after their phone call or receipt of their letter, do you?

You can read more on the The First-tier Tribunal rejected Carltons' appeal on 11 August (external website).

The OFT have produced a very useful guide called ‘Been contacted by a debt collector?’