Debt Collection (Consumer Credit Act)

I congratulate my hon. Friend the Member for Thurrock (Andrew Mackinlay) on securing the debate. I recognise that he has a long interest in the behaviour of debt collection agencies and the way in which they are regulated. Others in the House are concerned about the issues that he raises, and I and Ministers in other Departments have taken those issues extremely seriously. I recognise that we need to do more, and in that spirit I welcome tonight's debate and his continuing interest in the subject. Some of the concerns that my hon. Friend raises were sharply brought home to me early in my current ministerial job by the tragic death of Beryl Brazier. Hon. Members may remember that Mrs. Brazier took her life after being hounded for the debt of a man with whom she was not connected. Since the events leading up to the death of Beryl Brazier were first raised in the House by my hon. Friend the Member for South Derbyshire (Mr. Todd), I have pursued the need for action to ensure that we tighten the system of regulation in such cases. The Beryl Brazier case indicated that appalling errors were made in transferring the background facts of the case between the businesses concerned with pursuing the debt. Such failures in transferring data between lenders, debt collectors, tracing agents and debt purchasers are not only a breach of the law, but are unforgivable, especially when they result in such tragic consequences. New powers introduced as a result of the Consumer Credit Act 2006 and implemented in April 2008 have helped the Office of Fair Trading to begin to tackle poor practices within the industry still further. The OFT established in April 2008—just 12 months ago—a dedicated unit to monitor debt collection agencies, which it rightly identified as a sector of the business world needing particular monitoring. I shall come to how those powers have been used by the OFT, but first I should say that the OFT has long given clear guidance that debt collection agencies should make reasonable efforts to obtain from a creditor or other agency sufficient information about the debt. For example, the OFT would expect the debt collection agency concerned to have checked the accuracy of the client data details that it received from the creditor or agency, and, where possible, to have obtained a copy of the original consumer credit agreement. Equally, creditors are responsible for ensuring that debt history data are clear, accurate and capable of use by debt collectors, and, of course, for being clear to consumers who may dispute the debt. Debt collectors who hold a consumer credit licence also need to comply with specific fitness guidance that the OFT has issued, covering the debt collecting sector. The guidance was reviewed just three years ago. The new powers implemented under the 2006 Act in April last year have helped the OFT by allowing it to place requirements on licensees to modify conduct. Those powers have also allowed the OFT to impose financial penalties of up to £50,000 a time for failure to comply with a single requirement. Since April last year, the OFT has also had new information-gathering powers, enabling it better to monitor compliance by seeking information from licensed businesses about their activities, including their debt collection practices. In addition, the OFT now has powers to take into account a company's competence lawfully to carry on credit activities when assessing its fitness to be given or to retain a licence. The OFT must also, when determining whether a licensee is fit to hold a licence, consider any evidence of the licensee being engaged in business practices that appear to be deceitful, oppressive or otherwise unfair or improper.