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News for Members

06 October 2015

Ombudsman News - Debt Collection Case Study

The following case study from the Financial Ombudsman Service has been brought to the attention of the team at the CCA.  It's particularly relevant to the home credit sector and therefore we would like to remind our members of the industry guidance regarding debt collection.

As Mr M arrived home from work, he was told by a neighbour that a debt collector had been asking after him. He then found that the debt collector had left a note on his front door, explaining they’d visited about arrears on his loan.

Mr M complained to the loan provider, saying he was very embarrassed that his neighbour now knew he was in debt – and that this had been displayed in a note for anyone to see.

The loan provider apologised and offered to reduce Mr M’s arrears by £25. But Mr M didn’t feel this made up for the embarrassment of having people know about his financial circumstances – so he brought his complaint to us. Complaint upheld.

The loan provider had accepted that their debt collector shouldn’t have left the note. But to decide whether they’d done enough to put things right, we needed to understand what the impact had been on Mr M.

Mr M sent us the note – and a photo he’d taken of it pinned to his door. The note included specific details about how much he owed – and it had been clearly visible. Mr M said that one of his neighbours had read the note and talked to the debt collector. He said that when this neighbour was telling him about the debt collector’s visit, some of his other neighbours were nearby and could have overheard.

Mr M told us he was extremely embarrassed by what had happened – and was now worried about bumping into his neighbours.

We pointed out to the loan provider that industry guidance for debt collection clearly states that companies shouldn’t disclose debt details to third parties. In our view, while the debt collector hadn’t given any details directly to Mr M’s neighbours, the fact they’d left the note clearly visible on his front door meant they’d breached this guidance.

The incident had been very upsetting for Mr M – and we agreed that the loan provider hadn’t fully recognised the impact on him. We told them to increase their offer to £400, to better reflect the worry and embarrassment their actions had caused.

(Source:  Ombudsman News - September 2015 - 128/2)

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