News In Focus
OFT warning over bringing debt actions
Taking court action against consumers outside their home jurisdiction is unacceptable, the Office of Fair Trading warned yesterday.
An OFT investigation into Creation Consumer Finance Ltd, which provides point of sale finance facilities through major retailers, home improvement suppliers and motor finance dealers, revealed that a firm of solicitors acting on behalf of the company was issuing proceedings against Scottish debtors in English courts.
The OFT regards this practice as unfair because the unfamiliar law and procedure involved in a court claim in a different jurisdiction, and any associated travel costs, may deter consumers from defending such action.
It has now imposed requirements on Creation Consumer Finance that that the company must:
- ensure that businesses and/or firms acting as its agent or subcontractor in the course of any consumer credit licensable business comply with the OFT's Debt Collection Guidance;
- not issue, and shall ensure that third parties acting on its behalf do not issue, proceedings against a consumer in a jurisdiction other than that in which the consumer is domiciled.
The OFT is warning all consumer credit licence holders that taking action or threatening to take action against consumers in a court outside their home jurisdiction is a breach of the OFT's Debt Collection Guidance. Where there is evidence that businesses are engaging in such behaviour, the OFT will take action to ensure compliance with its guidance so that there is no repetition of the practice.
Failure to comply with the Guidance may call into question the fitness of a business to hold a consumer credit licence.
Ray Watson, OFT Director for Consumer Credit, said: "Issuing proceedings in a different jurisdiction is clearly unacceptable and lenders should take heed that the OFT will act to prevent this practice. Lenders must also be aware that they are fully responsible for the actions of third parties acting on their behalf, and must ensure those third parties do not breach our guidance."
Consumers who have evidence that consumer credit licence holders or their agents are engaging in this practice are invited to send complaints to: Enquiries, Office of Fair Trading, Fleetbank House, 2-6 Salisbury Square, London EC4Y 8JX or firstname.lastname@example.org .