Debt purchaser warned by OFT following string of consumer complaints

One of the largest debt purchasing organisations in the UK has been ordered to improve its debt collection practises by the OFT. 1^st Credit Ltd was investigated after numerous complaints were received about the firm’s behaviour from consumers, Citizens Advice, CCCS and Consumer Direct.

The OFT has demanded that the debt purchaser stops issuing debtors with idle warnings of bankruptcy “where it is unlikely that proceedings will be initiated.”

The firm has also been instructed to refrain from discussing “legal action” with consumers when it is unnecessary and to ensure that “sensitive cases involving vulnerable individuals” are dealt with appropriately.

Requirements were also set out for 1^st Credit to engage more with debt advisors acting on behalf of the debtor.

The OFT intervened after concerns emerged about debt collection practises used by certain companies becoming overly aggressive and intimidating.

In an example shown in BBC programme Panorama: Can’t Pay, Won’t Pay, 1^st Credit refused to freeze a consumer’s debts even after his stepdaughter submitted proof that he had been sectioned by the mental health act.

Although the OFT stated that 1^st Credit had taken a “constructive approach” in responding to its concerns, the company has been warned that failure to comply with the outlined requirements will result in a £50,000 fine for each occurrence and possible revocation of its consumer credit license.

Creditor Liaison Policy Officer from Citizens Advicr, Alex MacDermott has said: “Despite OFT debt collection guidance requiring all creditors and debt collectors to treat borrowers in arrears fairly and sympathetically, Citizens Advice Bureaux regularly report cases of aggressive debt collection practices which only compound existing debt problems.

“This action was a direct result of consumers reporting evidence of bad practice to the OFT and we would urge anyone who thinks they have been treated unfairly by their creditors and debt collectors to complain to the Financial Ombudsman Service for redress and to the regulator (the OFT) to help stamp out bad practice.”