Law reform body urges clean-up of debt collection
Licensing system would protect consumers from harassment
DEBT collectors, who are not regulated and often have a criminal background, should get short-term licences that will be removed if they intimidate people, it has been recommended.
A number of former criminals are involved in debt collection agencies, with accusations that some collectors harass people and claim to be acting in an official capacity.
Now the Law Reform Commission (LRC) has recommended that debt collectors should be regulated by the Central Bank's financial regulator section.
The commission said there was a strong case for a licensing and regulatory system for debt collectors, because of the "acute potential for consumer harm" and because the law fails to protect consumers the way it does in other countries.
The activities of debt collectors already come under the provisions of the Consumer Credit Act 1995 and the Non-Fatal Offences Against the Person Act 1997.
The 1997 act, for example, bans collectors from distressing, alarming or humiliating consumers, and bans debt collectors falsely claiming to be acting in an official capacity.
Regulated firms that employ debt collectors must ensure that consumers are treated fairly under the Consumer Protection Code, but the Central Bank has no power to take action against a debt collector directly.
And if the debt has been sold on there is no requirement for the debt collector or the regulated firm to ensure the code is not breached.
The LRC has now decided closer regulation is required to prohibit certain unfair practices not outlined in the existing legislation.
Codes of practice
Existing codes of practices of bodies like the Irish Institute of Credit Management should be given a statutory footing.
Also called for by the commission is the regulation of private debt advisers.
There has been a mushrooming of debt advisers often charging large amounts of money to sort out the finances of heavily indebted consumers. Some have been accused of preying on people at their most vulnerable.
The report makes 200 recommendations, including the setting up of a new Debt Enforcement Office to oversee new non-judicial personal debt settlements.
Yesterday the Irish Banking Federation said it supported the broad thrust of the reforms but needed to study the reforms in detail.
The banking federation also agreed with the call for the regulation of debt collectors and private money advice firms.