OFT Sends Warning To Debt Collectors

Fri, 15 May 2009

Debt collectors have been warned to stop leaving messages with the neighbours of individuals being pursued for payment of debts .

The Office of Fair Trading (OFT) said it is "unacceptable" that debt collectors are using neighbours to pass on messages to trace subjects and stressed that the practice should be ceased immediately as it breaks the spirit of its debt collection guidance.

The warning comes after a review of 'trace and collect' company Link Financial Limited (Link), carried out by the OFT and Lambeth Trading Standards, discovered that the company was using the controversial practice to chase up outstanding debts .

Link has now pledged to stop contacting neighbours about people's debt problems and the OFT has imposed requirements on the London-based company to confirm that it will no longer engage in this practice.

The watchdog has also promised to monitor other companies and said it would be willing to take enforcement action against businesses in the sector that continue to use these tactics.

Nigel Cates, the OFT’s deputy director for consumer credit, said: "Using neighbours to pass on messages to trace subjects is an unacceptable practice that contravenes our debt collection guidance."

"It has the potential, whether unintentional or not, to lead to the disclosure of private financial affairs and to cause distress and embarrassment, and we have made this clear in discussions with the Credit Services Association ."

He added: "We are pleased that Link has acted responsibly and taken positive steps to change its policies and procedures."

"If other businesses continue to engage in similar practices we will not hesitate to use our licensing and enforcement powers."
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