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article imageNew legislation to deal with debt collecting agencies

By Alexander Baron     May 15, 2011 in Business
An article relating to a recent BBC Radio "Money Box" programme and some of the shoddy tactics used by collecting agencies to chase debtors - real and imagined.
On March 10, the Office of Fair Trading launched a 12 week consultation on its updated Debt Collection Guidance. The practices of some of the companies operating in this field have long given the authorities cause for concern. In May 1970, the Lord Chancellor himself alluded in a Parliamentary debate to some of the strong arm tactics used to collect debts – real and imaginary:
“Your Lordships may remember that the Payne Committee gave certain examples of harassment, which included the blue frightener and the red frightener, being printed notices announcing an intention to institute proceedings or demand payment and intended to be mistaken for a county court summons or otherwise calculated to alarm the debtor. “
Thirty years and more on, the same tactics are still being used. Last week, both a BBC television programme – Don’t Get Done, Get Dom - and yesterday’s Radio 4 Money Box programme investigated actual cases of harassment.
One such case was that of a man hounded by Buchanan, Clark & Wells for a non-existent debt of nearly four hundred pounds allegedly owed to a telephone company. He knew the debt was non-existent because he had never had an account with the phone company concerned, and replied to their letter telling them they had to prove to him the money was actually owed; he said they failed to reply to this letter but a fortnight later he received a “final demand” which “felt rather aggressive”; he responded, reiterating the same points, and next received a phone call at work; they told him they had obtained his work number through Experian.
In spite of his continual protests including demands for proof of the debt – sent by recorded delivery – the company kept sending him letters ignoring his, and continuing to make the same demand. It was only after a member of the Money Box team contacted the company that the demands desisted when “administrative errors” came to light to show that there was indeed no debt.
The advice given by Money Box is that the first thing anyone pursued for a non-existent debt should do is dispute the claim. If the company refuses to cooperate, but continues simply to harass the alleged debtor, then their behaviour can be deemed to constitute “physical and psychological harassment”. He might have added that it could in theory also fall within the remit of the Protection From Harassment Act .
When Money Box presenter Paul Lewis asked financial consultant Nick Lord at what point does writing a letter become harassment, he replied once the company has been put on notice that there is no debt, any further processing of the claim will constitute harassment, adding that consumers need to be robust and stand by their rights.
The issue of companies selling on their debts was also raised in the programme. The response was basically the same, that the company that has bought the debt must take steps to ensure that it is actually owed by the person it is pursuing.
Some debt collecting companies chase what are known as zombie debts; these are debts which the original company has given up on if not written off entirely; they are sold on for a fraction of the actual debt, and the new holder tries to resurrect them.
The company Buchanan Clark & Wells has a long history of using tactics that the faint-hearted may consider intimidating; anyone pestered by them or similar debt collecting companies would do well to avoid the expense of sending registered letters and simply respond by e-mail putting them on notice as Nick Lord said. After that, they can chase all they like but for any debt – real or imagined – under a few thousand pounds it is unlikely they will take any action at all, besides send letters at their own expense.
One reason for this is that very often these demands are try-ons; there may actually be a real debt but for less, perhaps much less than the actual demand. The debt may be entirely fictitious as in the above case alluded to by Money Box; it may be the debt is due from someone with a similar sounding name, or that the debt chaser does not actually have the all-important paperwork.
Another reason is that pursuing people for small sums of money through the British courts is both time consuming and expensive, more so since the Woolf reforms. Amounts under £5,000 are generally considered small claims and are alloted to the fast track, from which solicitors’ costs are not usually recoverable. Furthermore, if a debt collecting company does actually bring such a claim, it will be dealt with in the defendant’s local County Court, which will mean further expenses including travel and possibly instructing a local solicitor. Far better to keep sending out strongly wording intimidating letters which the worldly wise will laugh at and throw straight in the wastepaper basket.
This image is one of three  red frighteners  that I personally received from Buchanan  Clark & W...
This image is one of three "red frighteners" that I personally received from Buchanan, Clark & Wells. The story behind them can be found as a comment to my article "New legislation to deal with debt collecting agencies"
This image is one of three  red frighteners  that I personally received from Buchanan  Clark & W...
This image is one of three "red frighteners" that I personally received from Buchanan, Clark & Wells. The story behind them can be found as a comment to my article "New legislation to deal with debt collecting agencies"
This image is one of three  red frighteners  that I personally received from Buchanan  Clark & W...
This image is one of three "red frighteners" that I personally received from Buchanan, Clark & Wells. The story behind them can be found as a comment to my article "New legislation to deal with debt collecting agencies"
More about zombie debts, Office of Fair Trading, Money Box, Paul Lewis, blue frighteners
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