Debt collectors slammed for preying on desperate customers as a third of complaints are valid
A regulator has hit out at "aggressive" firms over the way they talk to people who owe them money
DEBT collection firms have been slammed by the Financial Ombudsman Service for their aggressive treatment of customers in desperate situations.
The warning comes as new figures from the complaints service reveal that nearly a third (32 per cent) of debt collection gripes dealt with in 2018 were upheld in consumers' favour.
This uphold rate rose to more than half (54 per cent) of complaints on breaches of confidentiality and to over four in 10 (43 per cent) complaints about failures to carry out instructions.
The Ombudsman says a lack of empathy or flexibility from businesses towards people who are vulnerable is also creating more problems.
There's no hard and fast rule on what a "vulnerable" customer is but the Ombudsman says it can include those going through a difficult time, such as redundancy, divorce or bereavement or those affected by a series of unfortunate events.
Caroline Wayman, chief ombudsman and chief executive of the Financial Ombudsman Service, said: "In the past three years we have investigated thousands of complaints from consumers about debt collection companies.
How to cut the cost of your debt
HAVING large amounts of debt can be really worrying. Here are some tips from Citizens Advice on how you can take action.
Check your bank balance on a regular basis - knowing your spending patterns is the first step to managing your money.
Work out your budget - by writing down your income and taking away your essential bills such as food and transport.
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs.
Pay off more than the minimum - If you’ve got credit card debts, aim to pay off more than the minimum amount each month to bring down your bill quicker.
Pay your most expensive credit card sooner - If you have more than one credit card and can’t pay the balance off in full each month, prioritise the most expensive card (the one with the highest interest rate).
Prioritise your debts - If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them.
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don't pay.
Get free advice - If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further.
Groups such as Citizens Advice and National Debtline offer free advice and can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans.
"These complaints cover a wide range of issues, including aggressive customer service tactics, disputes about the size of the debt, breaches of confidentiality and failure to carry out instructions.
"We have seen cases where a lack of empathy or flexibility from businesses can create more problems for people who are struggling, and who may be in vulnerable circumstances."
In 2018, the Ombudsman dealt with around 3,300 inquiries about debt collection and took on more than 1,000 new complaints for investigation.
The complaints cover credit and consumer loans, such as mortgages, credit cards and personal or business loans, but not household debts, such as utilities or council tax.
Of the debt collection complaints resolved by the Ombudsman last year, one in five (21 per cent) were about whether the consumer was being asked for the right amount of money.
One in seven (13 per cent) were about customer service issues, including being contacted excessively, and 13 per cent were where the customer told the service that the debt being chased did not belong to them.
When it comes to payday loans, the Ombudsman says complaints nearly doubled during the first nine months of the current financial year compared with the whole of the previous financial year.
There were 32,774 payday loan complaints between April and December 2018, compared with 17,256 for the whole of the 2017-2018 financial year.
Ombudsman complaints in numbers
THE debt collection figures were published alongside data on all complaints handled by the Financial Ombudsman Service in the third quarter of the 2018-19 financial year.
Its figures also showed:
- The Ombudsman took on more than 1,000 cases per day typically between October and December 2018
- There were 92,903 new complaints during the three-month period.
- Overall, the Ombudsman upheld 33 per cent of the complaints it resolved
- Uphold rates rose to 56 per cent for complaints about current accounts and to 54 per cent for gripes about payday loans.
- Payment protection insurance (PPI) continues to make up the bulk of complaints to the service, accounting for nearly 44 per cent of gripes, with 29 per cent of complaints upheld in consumers' favour.
To complain to the , first complain to the provider involved. If you don't get a response within eight weeks or you're unhappy with the response you do get, you can take the complaint to the Ombudsman.
But the Ombudsman did say there were several instances where debt collection businesses have showed good practice.
Most businesses wrote off debts if it was clear customers would never be in a position to repay it, and they were also flexible in terms of how much in repayments they were prepared to accept.
Most businesses also had references to debt charities in their letters - although sometimes this was in small print or at the bottom of the letter.
But charity Citizens Advice says more needs to be done. It's calling for an independent regulator and complaints process for the bailiffs industry.
Its chief executive, Gillian Guy, said: “The Ministry of Justice has the evidence in front of it to establish a bailiff regulator.
"It now needs to follow through. An independent complaints process must also be introduced, like in the financial services sector, so bailiff complaints can be reviewed independently of the industry.”
More on Money
It comes after The Sun revealed that half of Britain is in debt and the poorest 10 per cent have to borrow cash just to pay for day-to-day living costs.
Last year, The Sun launched its Stop The Credit Rip-Off campaign to help the millions of families who fall prey to doorstep lenders and legal high street loan sharks.
Banks are set to be banned from charging rip-off unarranged overdraft fees in a high-cost credit crackdown by the industry watchdog.
And in May, we revealed how overdraft fees can cost MORE than a payday loan.
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