Debt collection agencies under review

OFT is consulting on guidelines to toughen up the rules

Being chased by a debt collection agency is bad enough. But what happens when you are chased for a debt you do not owe?

Moneybox listener Mike from Norwich fell into a dispute with Sky TV four years ago when it billed him for two months of subscriptions after he had closed his account with them.

He thought the matter had been resolved. But recently he received a bill for £32.56 from a company called Oxford Servicing, a debt collection agency employed by Sky.

Mike wrote to protest that he had no debt. But the demands continued until he received a letter threatening legal action.

He says Oxford Servicing has been unable to provide any evidence to back up its claim that he owes this money.

"I make requests for... invoices or reminders that I might have been sent and they just send another bill saying pay in seven days or else"

Complaints

John Lee is a trading standards officer in West Lothian where Sky has its subscription centre.

His office has been inundated with complaints from former customers like Mike, who are receiving demands for small sums of cash, that they know nothing about.

"The lowest one is for nine pounds (dating from) 1998. I find these threatening letters a bit incredible in these circumstances."

Complaints have also flooded in to Citizens Advice Bureaux across the country.

Lax rules

Sue Edwards of the National Association of CABs says the current rules governing debt collecting are very lax and allow companies like Oxford Servicing to flourish.

"It is very easy to get a consumer credit license. It actually costs less that £200 even if you are a big bank."

The Office of Fair Trading has told Moneybox it is unhappy about the methods of some debt collecting agencies.

It is now consulting on new guidelines to toughen up the rules.

Aggressive letters

The OFT is concerned many firms are issuing aggressive and misleading letters, often threatening court action, and do not have an adequate complaints procedures if things go wrong.

Since Moneybox got involved, Sky has investigated Mike's situation and dropped the case against him. But it insists that mistakes like his account for less than one per cent of all the debts it is pursuing.

It stands by Oxford Servicing and the methods it uses.

Despite threats of legal action, ultimately companies like Sky must be able to prove that these former customers do owe money. This means providing accurate bank statements and customer services records.

If they can not give these it is very unlikely they will take action in court, which is worth remembering if you are asked to pay a debt you do not owe.

BBC Radio 4's Money Box was broadcast at 12pm on Saturday, 14 December 2002.