Plan to stop credit card harassment
Published 09/11/2010 | 05:00
CREDIT card companies will be heavily restricted from contacting people who are behind on their payments.
Some credit card companies contact people in arrears up to 20 times a day.
Harassing people is seen by card providers as the best way to force people to repay as debts are not secured by an asset.
Now the Central Bank has proposed new rules to restrict firms that provide loans, credit cards, hire purchase and overdrafts to just three communications a month with a consumer who is in arrears.
A similar restriction on unsolicited contact that is proposed for mortgage lenders is being fiercely resisted by banks and building societies.
Central Bank assistant director general for consumer protection Bernard Sheridan said yesterday there was evidence of some credit card providers harassing customers who have missed payments.
MBNA told this newspaper last year it was investigating claims its staff were harassing hard-up consumers who had fallen behind in their payments.
The company defended its debt collection methods after the Irish Independent uncovered allegations it phones people who are in arrears up to eight times a day, texting them and phoning them at work demanding payment. Calls are being made from call centres in India and the UK.
And the state-supported Money Advice and Budgeting Service (MABS) has confirmed multiple cases of consumers being harassed by a number of credit card firms.
This is despite the fact that the Non-Fatal Offences Against the Person Act 1997 specifically prohibits harassment.
High levels of contact often forces under-pressure consumers to prioritise repaying the credit card company at the expense of their mortgage, when the best advice is to use any scarce cash to pay your mortgage or rent first.
Mr Sheridan said the Central Bank, which now has merged with the Office of the Financial Regulator, has proposed limiting unsolicited contacts over arrears to just three communications a month.
This is one of the measures proposed in a beefed up Consumer Protection Code, a statutory rule book setting out how firms must treat consumers.
Mr Sheridan said he expects the measure to be bitterly opposed, particularly by credit card providers.
"I would say a number of credit card providers won't be happy with this. But why should people be persecuted if through no fault of their own a consumer falls into arrears," he added.
The revised consumer code will also require banks and other finance firms to contact consumers immediately when they get into arrears on loans and other credit facilities.