OFT imposes requirements on Mackenzie Hall to improve handling of disputed debts
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Issued 21 April 2009
The Office of Fair Trading has taken action against Mackenzie
Hall Ltd, a debt collection company, requiring it to improve its
The OFT has used its powers under consumer credit legislation
to impose 'requirements' on Mackenzie Hall after an investigation found
that some of its business processes failed to meet satisfactory
standards. As a result of these requirements, Mackenzie Hall must not:
* pursue a debt where it has been notified in writing that
there is reasonable cause to believe that the debt is in dispute
* pursue a debt where it has been notified in writing that the
debt is statute barred.
Failure to comply with a requirement could lead to a fine of
up to £50,000 and/or possible revocation of Mackenzie Hall's consumer
Following an application by the company to renew its existing
consumer credit licence, the OFT carried out an in-depth investigation
into Mackenzie Hall's business practices and procedures, including a
visit to its offices. The investigation found that whilst the company's
procedures were of a satisfactory standard, complaint evidence received
by the OFT showed that some of these procedures were not always
The OFT raised its concerns with Mackenzie Hall and confirmed
that it would be looking to impose requirements to improve compliance.
Mackenzie Hall acknowledged the problems and, as allowed under the
Consumer Credit Act 1974, made a proposal to address the OFT's
Ray Watson, OFT Director for Consumer Credit, said:
'Persisting with debt collection activity when debts are in
dispute can give rise to significant consumer detriment, particularly
where vulnerable consumers are involved.
'In this case Mackenzie Hall has co-operated fully with the
OFT and has taken steps to ensure that the business follows correct
procedures for handling disputed and statute barred debts.
'We will continue to use our licensing powers to take action
to protect consumers where debt collectors fail to ensure full
compliance with our guidance.'
1. The Consumer Credit Act 1974 (the Act) requires debt
collectors, businesses that offer goods or services on credit and/or
are involved in activities relating to credit or hire, to be licensed
by the OFT.
2. In 2003 the OFT issued the Debt Collection Guidance
(updated December 2006) which sets out minimum standards for those
intending to collect debts. Failure to comply with the Debt Collection
Guidance may call into question the fitness of a business to hold a
consumer credit licence.
3. Following implementation of the OFT's new powers under the
Consumer Credit Act 2006 on 6 April 2008, where the OFT is dissatisfied
with any matter in connection with a business, a proposal to carry on a
business or any other conduct by a licensee, associate or former
associate, the OFT may impose 'requirements' on the licensed business.
Requirements may require a business to do or not to do (or to cease
doing) anything specified for the purposes connected with addressing
the OFT's dissatisfaction, or securing that matters of the same or a
similar kind do not arise.
4. Two different processes exist for imposition of
requirements. One is where an adjudicating officer issues a notice to
the trader that the OFT is minded to impose requirements to address
dissatisfaction. The trader is then given the opportunity to make
representations to the adjudicating officer. The adjudicating officer
makes a determination and the trader has the right of appeal against
the determination to the Consumer Credit Appeals Tribunal.
Alternatively, a business may offer a proposal to address the OFT's
dissatisfaction pursuant to section 33D(4) of the Act. In these
circumstances the OFT is not required to issue a notice that it is
minded to impose requirements if the proposed determination is in the
same terms as the proposal made by the business.
5. The fact that requirements have been imposed on Mackenzie
Hall appears on the consumer credit register. A copy of the
requirements imposed can be downloaded here http://www.oft.gov.uk/shared_oft/business_leaflets/consumer_credit/requirements.pdf
6. We will monitor Mackenzie Hall's compliance with the
requirements. Any complaints about non-compliance should be sent to:
Office of Fair Trading
2-6 Salisbury Square
7. Under the Limitation Act 1980, which applies to England and
Wales, a debt is considered to be statute barred when no payments have
been made against it or where it has not been acknowledged for six
years. A statute barred debt cannot be legally recovered. Whilst the
OFT accepts that the debt still exists, the OFT considers that it can
be unfair to pursue the debt in the circumstances set out in our Debt
Collection Guidance (http://www.oft.gov.uk/shared_oft/business_leaflets/consumer_credit/oft664.pdf).
In Northern Ireland, statue barred debts are governed by the Limitation
(Northern Ireland) Order 1989. In Scotland, statute barred debts are
governed by the Prescription and Limitation (Scotland) Act 1973 which
states that the debt itself ceases to exist after five years providing
that it has not been acknowledged and that no relevant claim against it
has been made by the creditor.
8. The OFT's advice for those being pursued by debt collectors
is: don't panic or ignore the problem, seek help and advice from your
nearest Citizens Advice Bureau and contact those who you owe money to
as soon as possible.
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Article Published/Sorted/Amended on Scopulus 2009-04-22 01:27:11 in Business Articles