ARTICLE...
Preparing Your Paperwork - Are You Competent?
This summer sees the increased scrutiny cast over the debt collection industry change - and hopefully become more relevant in the process. There are also plans to modify the OFT debt collection guidance.
Many of you will no doubt agree with the OFT about the lip service paid to regulation and compliance over the last few years. They feel that there is a 'lack of general competence to operate a consumer credit business'.
That is why they introduced credit competence assessments in April 2008, as they highlighted the risks faced by consumers, as well as to meet the legal obligations to debtors.
The credit competence plan of 39 questions (part of CRP1) now needs to be completed when you apply or reapply for a consumer credit licence.
Those operating in debt counselling, debt adjusting or credit repair will be under increased scrutiny from the OFT, with another 39 questions for CPR1. This includes creditors and debt purchase companies, who effectively become creditors after the sale.
Those thinking of reapplying for their consumer credit licence will know that not only do you have to answer the 39 questions, much like a tender document or debt collection agency audit, but you will also have to include 26 proofs in the debt collection CCR1.
This can be broken down into six key areas:
Plans & Manuals
You need proof of a compliance plan or compliance strategy document. You also need a compliance manual or proof of a compliance monitoring system that is up to date and accurate and a separate procedures manual or desk instructions for call centre agents. That manual should cover complaints procedures acknowledging third party agents, legal issues, how to handle stature barred debts, data protection issues for tracers, enforcement powers for doorstep collectors and bailiffs, telephone scripts and other debt collection guidance. Finally, you will also need a business model fit for the consumer credit industry.
Monitoring
You need proof of a monitoring process for debtor complaints, along with a compliance plan and debt collection in general.
Training
You need proof in the form of certificates for training in compliance issues, complaints handling, debt collection guidance and data protection.
Procedures
Most agencies and purchasers will have a number of procedures in place already, but the OFT will be looking for procedures with regard to FOS complaints, handling third party representatives of debtors, debt collection in general, negotiating fees and charges, how you go from debt collection to doorstep and different procedures for different letters - i.e. how you handle letters from vulnerable debtors. And, if you have bailiffs working for you, you will need to outline procedures and powers of enforcement, recording of visits and data protection procedures for tracing.
Certificates
The OFT won't just be looking for certificates in training, as enforcement agents or as an insolvency practitioner. They will be looking for the certificates of your external agents that you use for debt collection, legal collections, tracing, doorstep and bailiffs.
Documentary Evidence
The OFT or local trading standards officials will be looking to validate onsite the 'proof' you have provided along with your application documentation.
These need to show you have a compliance programme, telephone scripts, policies and practices to prove data protection compliance with the Data Protection Act 1974 and that your letterheads and emails are covered in the licenses list of trading styles used to conduct your business.
The 39 questions also ask that you have a dedicated person to handle complaints and third party debt management organisations.
Obviously, some companies will not be able to comply with all this, but some of the questions are not designed to be answered by small businesses or one-man-bands. IN fact, the document has been designed to cover the wide variety of businesses that need a consumer credit licence to operate.
What is not so clear is why there are instances were the local trading standards officers investigate non-consumer credit licence issues like 'Health & Safety' and HR under an OFT audit.
Original article by Alistair McGawn, courtesy of CCR. For further information visit www.ccrmagazine.co.uk
