Debt collectors: Know your rights

By Michael Lloyd

If you're being chased for money, it's important to know your rights.

Although the Office of Fair Trading (OFT) and the Financial Conduct Authority (FCA) tightly regulate the collections industry, the fact that many collections agents are paid on commission and work to demanding targets can and does result in rules being flouted. In addition to this, it's not unheard of for collections managers to turn a blind eye to -- if not actively encourage -- shabby practices, so long as payments keep rolling in.

According to Financial Ombudsman Service media manager Samantha Hargreaves, the most complained about issues include:


1. Harassment
Debt collectors are not supposed to behave in a manner that makes you feel harassed or bullied. A large number of complaints the FOS deals with relate to the frequency and timing of collections calls, and the manner and tone adopted by the agents.

Collections firms also are forbidden from calling you repeatedly throughout the day or at unsociable hours, and they can't discuss your debt with unauthorised third parties or pressure you to pay more than you can afford.

"We often hear of cases where debt collectors repeatedly text and phone individuals, and sometimes at work, about repayment," Jane Tully, head of insight and engagement at the Money Advice Trust, said in an emailed response to questions. "While it is not unreasonable to expect some communication from a debt collector if there is an amount owing, all debtors are still
entitled to reasonable and fair treatment."

Collections agents may not exert undue pressure on debtors. If you're asked to take out additional credit or to sell your home to clear your debt, you could well have grounds for complaint. Other grounds include false claims that you will lose your home, receive a visit from bailiffs or face court action, although many collectors try to get around this by using words such as "may" or "could" to qualify any threats they make. Don't stand for it.

2. Disputed debt
According to Hargreaves, disputed debt is another issue the ombudsman regularly receives complaints about. If you feel that any fees or charges added to money you owe are unfair, you may be able to appeal them.

The OFT requires that charges applied to debts for non-payment are proportionate to the amount outstanding. If you're repeatedly seeing punitive fees added to your account or don't agree with the way a debt has been calculated, you may be able to make a successful complaint.

3. Wrong debtor
The FOS receives a number of complaints each year about collections firms persistently chasing the wrong people for outstanding debts. Some collections agencies seek to save time by sending demands out to anybody they can track down who has the same name as the debtor they're chasing; others use shoddy trace agencies that link debts to the wrong people. This can result in you receiving demands for money you don't owe.

If you're being chased for a debt that isn't yours, request that your account is frozen while an investigation is conducted. Hargreaves explains that the ombudsman would expect a collections agency to stop sending out demands while an investigation is carried out under these circumstances.

4. Settled debt
The sheer volume of delinquent accounts that some collections departments and agencies deal with can mean that you are chased for money you've already paid or for which you have set up a repayment plan. The FOS would not expect a collector to continue to chase payment in either of these instances without first looking into your claim, Hargreaves said.

Making a complaint
"We would [...] urge anyone who feels that they have not been fairly treated by a collections agency to make a complaint to the company directly, and if it is not resolved satisfactorily, to contact the Financial Ombudsman Service which can investigate further," said Tully.

If you feel an in-house collections department or a collections agency is treating you unfairly, gather evidence before making a complaint:

  • Keep a diary detailing any contact from the company concerned, particularly if you feel you've been harassed.
  • Submit your complaint to the collector in writing by recorded delivery.
  • Request no further contact until your complaint is resolved.

If the collector concerned fails to address your complaint to your satisfaction within eight weeks, you'll have six months in which to seek redress from the FOS. If the ombudsman finds in your favour, you could be in line for compensation or see your debt wiped out or cut considerably, depending on the nature of your complaint.

See related: Stop debt collectors digging up dirt on social media, What to do if you're chased for debt that's not yours

Updated: 30 May 2017