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Debt collection agencies warned over illegal calls

Published on 26 May 2009 under category: legal

Debt collection agencies have been warned they may face legal action if they do not stop cold calling customers and providing misleading information.

The Office of Fair Trading (OFT) has warned ten firms not to make the unsolicited calls following complaints about the six debt management and four cold-calling companies.

Nigel Cates, deputy director of consumer credit at the organisation, described the actions of the businesses as "completely unacceptable" stating they were taking advantage of people in "distress".

"We will not hesitate to take action against any business that uses misleading calls to advertise debt management services," he added.

The OFT said some of the companies had broken the law during the calls, with Mr Cates adding that the action "must cease immediately".

In an investigation following the complaints it was found some callers were told they were being passed to a not-for-profit debt adviser, when they were speaking to a debt management business.

The recent New Local Government Network report warned that an increasing number of people will use loan sharks in the recession, as they cannot access credit from banks and other financial providers.

Chris Leslie, the report's author, said there is evidence that "illegal unsecured lending at extremely high rates of interest" is making a comeback.

Anya Bloom, a consultant at Cubism Law, suggested: "If you are looking to recover a debt and want to use a debt collection agency, you must ensure the agency operates within appropriate and legitimate boundaries."