A valuable service
The credit providers argue that they provide a valuable service and encourage people to borrow and pay back sensibly.
Barclaycard have recently introduced incentives for customers to repay. They also print a message at the bottom of the statements of those who fail to give more than the minimum payment for six months advising them to contact customer services.
Mr Darch however argues that companies are not being fair with their customers.
“Whenever you get a bill through it says ‘If you are having difficulties paying, contact us’, but you’re immediately put through to their in-house debt collection agency.”
He believes that the companies should encourage people to seek independent financial advice before taking measures against them.
“Maybe it should be a case that it says on all the bills If you are having difficulty paying here is a contact number for an external organisation for you to contact.”
Many of these organisations assist by negotiating more manageable repayment programmes for their clients.
Helen Saxon of the Consumer Credit Counselling Service says that where individuals sometimes have difficulty negotiating, they are usually successful.
“We find that the majority of credit providers do accept our plans. They do recognise that this is in the best interests of the client. I think creditors recognise that at least this way they’ll get some of their money back.”
Calling in the debt
But not everybody is able to reach an amicable settlement and creditors may sell on debts to collection agencies. Mr Darch believes that Barclaycard sold his £3,500 debt on for a fraction of the amount owed to an agency who, he argues, treated him unfairly.
“Debt collectors aren’t interested in [why]. You owe the debt, you’ll pay it.
" They will issue CCJs. They will send people to your door. They will contact your employers even though it’s against the law. They will put postcards through the door. They will use tactics like that. That is bringing the fear into it.”
The debt collection agencies contacted over these allegations declined to comment but as a licensed industry they are regulated by the Office of Fair Trading. They impose guidelines on issues such as dealing with queries and disputes, contacting debtors speculatively, under false pretences or at unreasonable times and intervals.
John Vickers, OFT Chairman says: “Debt problems can affect some of the most vulnerable consumers. Debt collectors must carry out their business fairly and openly. The guidance explains what is expected of debt collectors and sets out the sort of behaviour that could lead to action against licence holders.”
From his own experiences, as well as those of the people he advises, Mr Darch is unconvinced by their effectiveness.
“They are regularly breaking [the guidelines] and they know that they are going to get away with it, because the OFT doesn’t have the teeth. People are getting harassed on a daily basis, five, six, seven, eight phone calls a day, chasing a debt.”
The Citizen’s Advice Bureau is also cautious in their support of the guidelines. In 2003 it called for action to ensure that agencies take them seriously.
“OFT debt collection guidelines are a good first step in deterring harsh debt collection practices, but they must be well-publicised if they are to be effective. The acid test will then be how the OFT deals with complaints.”
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