OFT warns debt sector about tracing tactics requirements imposed on debt collection company

The OFT is warning the debt collection and tracing sector that using neighbours to pass on messages to trace subjects is an unacceptable practice and should be ceased immediately.

It is concerned that some businesses are breaching the spirit of the OFT debt collection guidance by using this trace method, which has the potential to reveal to neighbours that individuals are being pursued for payment of debts.

The OFT is calling on businesses in the sector to take positive steps to address these concerns. If businesses continue to use these tactics, the OFT will look to take swift enforcement action.

The OFT has imposed requirements on one 'trace and collect' company, Link Financial Limited (Link), to confirm that it will no longer engage in this practice.

Following an application by Link to renew its existing consumer credit licence, the OFT, working alongside Lambeth Trading Standards, reviewed Link's business practices and raised concerns about the use of this trace method.

Link agreed to stop using the practice and, as allowed under the Consumer Credit Act 1974, made specific proposals which addressed the OFT's concerns. As a result, the OFT has imposed requirements which state that Link must not in future use neighbours to pass on messages to trace subjects.

Nigel Cates, OFT Deputy Director for Consumer Credit, said:
'Using neighbours to pass on messages to trace subjects is an unacceptable practice that contravenes our debt collection guidance. It has the potential, whether unintentional or not, to lead to the disclosure of private financial affairs and to cause distress and embarrassment, and we have made this clear in discussions with the Credit Services Association.

'We are pleased that Link has acted responsibly and taken positive steps to change its policies and procedures.

'If other businesses continue to engage in similar practices we will not hesitate to use our licensing and enforcement powers.'