Many businesses use debt recovery agencies to try to recover unpaid invoices. However, they do not have the same powers as a bailiff or High Court Sheriff.
Debt collectors don’t have any power to force a debtor to make payment. All they can use is will power and persistence. They do not have the right to enter a debtor’s home or stay on business premises without consent.
How Debt Recovery Agencies Should Behave
- In pursuing payment, debt recovery agencies should speak and write in plain English.
- They should not harass the debtor by contacting it at unconventional hours or by making threats.
- Nor should they seek to embarrass debtors in front of customers or neighbours.
- Despite what some debt collectors may say, it is not a criminal offence if a debtor fails to pay a debt.
- Unless the debtor has agreed to do so already, the debt recovery agencies have no right to ask the debtor to pay any additional charges over and above the debt amount. The cost of the debt collector will be paid by the business instructing it.
- Some debt collectors can achieve results but those debtors who know the limited power (if any) they have, make them toothless.
Complaints About Debt Recovery Agencies
If a debt recovery agency instructed by you misbehaves, action may be brought against both the agency and you. The agency's conduct could also damage your reputation.
Regulated Credit Agreements
If the debt relates to a regulated consumer-credit or consumer-hire agreement, the debt collection agency must have a consumer credit licence. As such, the debtor can complain to the Financial Ombudsman, which has the power to make an order of compensation for distress and inconvenience. The Office of Fair Trading can also consider complaints against an agency as a whole but does not help resolve individual complaints. However, a number of complaints might result in the OFT taking away the consumer credit licence.
There are many debt recovery agencies, who only recover unregulated debts and do not need a consumer credit licence. Debtors can complain to the OFT but they may not intervene in individual cases. The complaint may not only be about the debt collectors but also about you. You are responsible for the debt collector being there in the first place so have a responsibility for their conduct.
If a debt collector is genuinely harassing a debtor, the police can intervene under the Protection From Harassment Act 1997.
Debt collection agencies have no powers to force a debtor to pay money. They may have a loud and annoying bark but their bite is toothless. To take meaningful action against a debtor who fails to pay, you need to involve the courts.