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OFT: 2011 Guidance
Over the last few years, there has been an unprecedented amount of legislative change and regulatory intervention regarding consumer credit. This has, without a doubt, impacted on the debt collection industry.
The latest milestone in this process will be the OFT's long awaited consultation on the revised Debt Collection Guidance (DCG) – which is due to arrive at the end of January 2011.
The current guidance, originally published in 2003 and amended in 2006, is actually a benefit to the industry, with the 2006 review showing that good practice became more common place and overall 'behaviour' improved as a result of the guidance. Its clear, concise tone also makes it a highly functional and usable piece of policy.
The current form is split into seven categories, but the new version would undoubtedly see this number increase to accommodate issues that have arisen in the last couple of years.
This includes the use of statutory demands and charging orders, dealing with disputed accounts, tracing debtors and taking steps to ensure the correct person has been contacted before seeking to collect debt;requesting proof of identity from persons contacted; dealings with third party representatives; and charging debt collection fees where there is no provision for them in the original credit agreement.
The fact the OFT is focusing on these is not much of a surprise. The Debt Collection Guidance Review (December 2006, OFT 800) identified the most complained about issues.
That list included failing to investigate disputed debts, contacting individuals about debt without being sure that the correct person had been identified, the use of inaccurate data, failure to supply information/documentation to support the demands being made of a debtor and not engaging with third party representatives appropriately.
These are all likely to be covered in the new guidelines and – if they are already present – the wording will be toughened accordingly.
The accuracy and availability of information is certainly going to be one of the key items on the list. This is a bugbear that has been mentioned previously by the OFT. Debt purchasers will be required to test a seller's ability to provide data. The OFT might even go as far as limiting sellers ability to sell accounts unless they can provide quality data.
Similarly, outsourced suppliers may have to conduct pre-selection audits along with ongoing reviews to ensure any issues are identified and resolved as soon as possible.
Failure to comply to these new guidelines is likely to impact on a creditor's fitness to hold a licence.
This will certainly increase the burden on businesses. However, the real problem could be abandoning the concise, clear style of the current guidelines in favour of a document weighed down by detail.
Original article, by Clare Hughes, courtesy of Credit Today.
