OFT Warns Over Unacceptable Debt Collection Tactics

Fri, 18 Jun 2010

The Office of Fair Trading has warned credit companies not to take legal action against debtors in a court outside their home jurisdiction.

The warning comes after an investigation into a Belfast-based consumer finance provider found that solicitors acting for the group started legal action against Scottish consumers who fell behind with their debts in English courts.

The OFT said the debt collection tactic used by Creation Consumer Finance was "unacceptable" as the unfamiliar legal process and cost of travel could deter consumers from contesting cases.

Following the investigation, the UK regulator has warned all consumer credit licence holders that taking against consumers in a court outside their home jurisdiction is a breach of the rules.

Ray Watson, Director of Consumer Credit at the OFT, said: "'Issuing proceedings in a different jurisdiction is clearly unacceptable and lenders should take heed that the OFT will act to prevent this practice."

"Lenders must also be aware that they are fully responsible for the actions of third parties acting on their behalf, and must ensure those third parties do not breach our guidance."

He added that the practice has been stopped by Creation Consumer Finance, which provides finance through major UK retailers, home improvement suppliers and motor dealers.
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