OFT imposes requirements on Mackenzie Hall to improve handling of disputed debts

The Office of Fair Trading has taken action against Mackenzie Hall Ltd, a debt collection company, requiring it to improve its practices.

Download Mackenzie Hall requirements (pdf 47 kb).

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, and
• 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 credit licence.

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 followed.

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 concerns.

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.'

THE OFT REQUIRES AS FOLLOWS:

1. That as of 15 April 2009

1.1 Mackenzie Hall Limited will not carry out Debt Collection Activity where it has been informed, in writing, that there is reasonable cause to believe that the debt is in dispute.

1.2 Mackenzie Hall Limited will not carry out Debt Collection Activity where it has been informed, in writing, that the account is statute barred.

Debt Collection Activity is defined as:

a) sending debt collection letters;

b) making of debt collection calls;

c) the use of any other medium for the purpose of collecting an outstanding debt; or

d) the acceptance of payments offered against a debt.

A debt is considered as in dispute where:

a) it has been reasonably demonstrated that the debt has been
previously paid;

b) a request under section 77 or 78 of the Consumer Credit Act 1974 has not been complied with, and this prevents the agreement being enforced without the permission of the court;

c) it is reasonably believed that the debt may have been incurred as a result of identity theft or fraud; or

d) it is reasonably doubted that the person being pursued for the debt is the actual debtor.

For the avoidance of doubt, where only part of a debt is disputed Mackenzie Hall Limited may seek to recover any other part of the debt that is not disputed.

ANY FAILURE TO COMPLY WITH THE ABOVE REQUIREMENTS WILL RENDER MACKENZIE HALL LIMITED LIABLE TO FURTHER FORMAL ACTION BY THE OFT. THIS COULD INCLUDE THE IMPOSITION OF FINANCIAL PENALTIES PURSUANT TO SECTION 39A OF THE ACT AND/OR THE REVOCATION OF MACKENZIE HALL LIMITED'S CONSUMER CREDIT LICENCE PURSUANT TO SECTION 32 OF THE ACT.

Signed:

peAsh-


Ray Watson, Director, Consumer Credit Group
Authorised signatory on behalf of the OFT