Debt Collection (Consumer Credit Act)

The purpose of this debate is to draw the House's attention to the abysmal state of debt collection methodology and the spirit governing it in the UK and the wholly inadequate safeguards for good and innocent people who are endeavouring to pay debt or who dispute it. It is a matter of fact that the debt collection industry relies on a combination of fear and ignorance to make a profit, and that is despicable. In 2006, the Office of Fair Trading and related agencies received some 5,700 complaints. In 2007, that figure had reached 8,000 and more than 11,000 complaints had been received by August 2008. That is a total of 25,000 complaints in three years, but the Office of Fair Trading took formal action—such as licence revocation or suspension, or the imposition of other requirements on debt collection agencies—in only four cases. I shall illustrate tonight that that is a wholly inadequate response and that Parliament has failed to stiffen the sinews of the OFT and give it legislative powers and duties to protect and promote the interests of innocent people. By coincidence, in the past 24 hours, the OFT has taken action against an outfit called Mackenzie Hall. Some of its procedures were found to breach the OFT's guidelines. Ray Watson, the OFT director of consumer credit, said:""Persisting with debt collection activity when debts are in dispute can give rise to significant consumer detriment, particularly where vulnerable consumers are involved."" But that is a pathetic response, because similar abuse happens every day in countless agencies. All we see is limp and late action by the OFT. How did I come to seek this debate? There were several reasons and I shall share them with the House. First, a constituent wrote to me in March because he had received a menacing letter from the communications company 3, which claimed that he owed it more than £800. The letter requested that he""treat this matter with the utmost urgency. Failure to respond within 20 days of the date of this notice will result in our chosen specialist debt purchasing partner Lowell Portfolio 1 Ltd directly contacting you to arrange repayment of the outstanding balance."" This menacing letter totally bewildered my constituent, who had never had knowledge of 3, or dealings with it. As his Member of Parliament, I wrote to the company on 26 March. I asked what all that was about and said that my constituent was bewildered and anxious, but I have not received a reply—except for the fact that, by another amazing coincidence, there was a phone call to my office just two hours before I commenced this Adjournment debate, asking for more information. That gives an idea of the sort of cavaliers and cowboys that we are dealing with, among both the companies themselves and their agents. Such behaviour has got to stop. Secondly, in February I happened to listen to the very fine BBC programme. "You and Yours", on which I think that the Minister subsequently appeared. The whole programme was devoted to the menacing attempts by debt collection and communications companies, as well as banking and financial institutions and others, to extract money from people. Some of the people involved are wholly innocent and do not have any debt, while others either dispute the debt or are willing to come to an arrangement about its repayment. The programme found that the companies had responded with bureaucratic inertia or an inability to communicate, or with the malevolent and menacing actions that I have described. Last Sunday week, The Sunday Times carried a very forensic and skilful article by its "Insight" team, in which they described the conduct of the Lloyds banking group's debt collection department. Workers in the so-called "recovery" department were secretly tape recorded, and the tapes revealed that it was suggested that they should put "the frighteners" on and "f…" customers who owed the bank money. Bank staff were incentivised by bonuses and, contrary to the code of practice of the Office of Fair Trading, claimed to represent firms of solicitors. The bank's staff are poorly paid, and have every incentive to maximise the extraction of money from the people whom they telephone. Inevitably, that leads to breaking the OFT code and often to a menacing attitude. One lady, a nurse, told The Sunday Times that she had been called six times a day at work, something that again breaches the OFT guidelines. Moreover, it was reported that the people who train new staff and induct them into the recovery unit persuaded them to remind home owners about repossession, and to tell them that they could be credit blacklisted.