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Mr. Mark Todd (South Derbyshire) (Lab): This brief debate will focus on a tragic death, one critical error and a series of other errors and misjudgments that contributed to a ladys death. I speak of Mrs. Beryl Brazier, who lived in my constituency for some considerable time. She moved house, and I will deal with the implications of her doing so.
Let me go through the sequence of events. Mrs. Brazier opened a credit account with GE Capital bank in 1998. She managed it perfectly well until she moved house in 2005, when she had arrears of about £500. She did not move farjust to another home in the Swadlincote urban area. GE Capital sought to trace her, using a tracing company, Westcot credit services, which subcontracted the task to another company, DataTrace. That company successfully traced her and spoke to her on the phone. She was perfectly amicable and provided all the details requested.
At the same time, the company was tracing a number of other debtors, including a Mr. Noorullah, but it failed to provide a tracing address for him. In preparing the tracing report going back to Westcot credit services, it used a formatted document in which Mr. Noorullahs and Mrs. Braziers data, which included her telephone number, were transposed. Thus Mr. Noorullah was reported as living at Mrs. Braziers address. GE Capital reported this address for Mr. Noorullah to Experian, the national credit reference agency, as a live address. It continued to pursue Mr. Noorullahs address, because it had a debt to recover from him as well. The letter was returned. The address was queried with Westcot, but Westcot did not pass the query back to the originator of the research, DataTrace, and there is no record of exactly how it attempted to check the address. It seems unlikely that the phone contact provided was actually used.
Westcot reported back to GE Capital that Mr. Noorullah was no longer at that address; it provided no more information than that. Curiously enough, and possibly because there is no evidence that Mrs. Brazier was anything other than an honest woman and may have provided forwarding information, GE Capital had by then received notification of Mrs. Braziers correct address, which was held on the system. GE Capital then updated the Experian database for Mr. Noorullah with a Gone away marker, indicating that that address was unreliable. It then decided for its own business reasons to sell on Mr. Noorullahs debt to a company called Aktiv Kapital, which contracted another company, Thames Credit, to pursue the debt. For reasons that are not entirely clear, although GE Capital now knew Mrs. Braziers correct address, it seemed not to have pursued her for her own debt.
It appears that Thames Credit sourced the address for Mr. Noorullah from Experian. That should have meant that the address provided was indicated as not being reliable; as I have explained, it would have had a Gone away marker on it. Thames Credit or Aktiv Kapital appear to have held other debts for Mr. Noorullah,
which were combined with the one owed to GE Capital to produce a sum in excess of £15,000. Letters addressed to Mr. Noorullah were sent to Mrs. Braziers address. They were initially returned, just as earlier correspondence from GE Capital was returned as Not known at this address, as hon. Members will recall. However, they continued to arrive.
Mrs. Brazier then visited the local citizens advice bureau in Swadlincote, on 23 February 2006, with a family member. The CAB asserts that it rang Thames Credit to say that Mr. Noorullah did not live at Mrs. Braziers address. Although the CAB has provided convincing detail of the call, describing the person answering it and the conversation that followed, Thames Credit claims to have no record of such a call.
Mrs. Braziers daughter reported that the visit to the citizens advice bureau had cheered Mrs. Brazier up considerably. She had become anxious about the correspondence arriving at her address and wanted the matter resolved. Indeed, some of the correspondence, to which I shall turn shortly, was quite threatening in tone and was causing her considerable anxiety. She was therefore much happier when the CAB said that it had spoken to Thames Credit and that the letters would stop coming as a result. But the letters did not stop coming; they continued to arrive and, in fact, became rather more aggressive, referring to field agents arriving at her home unannounced. That led Mrs. Brazier to lock herself in, even when with family members.
On 3 April, after another letter had been received, Mrs. Brazier telephoned Thames Credit and said that she had lived in her home for two years and did not know Mr. Noorullah. However, she had been receiving letters to him and felt that she should make a payment. She would send £600. In spite of the fact that she said otherwise, the negotiator apparently assumed that she did know Mr. Noorullah. A payment of £500 was duly received by Thames Credit and banked. The cheque was accompanied by a note, clearly from Mrs. Brazier, saying that she would forward £50 a week towards the debt. Her life savings before that withdrawal were around £1,000, so she had withdrawn half her life savings to make payments towards a debt incurred by another.
through public databases it has been confirmed that Mr. Noorullah is living at the address shown on this letter.
An inquest was held into Mrs. Braziers death, the main hearing being in September 2007. Attending were representatives of all the companies involved, except for Aktiv Kapital and Thames Credit. The companies attending were cross-examined, and in an adjournment the deputy coroner conducting the inquest expressed the view that Thames Credit should have been asked to attend, to answer questions on its role. He felt that that was the right thing to do, bearing in mind the direction in which the evidence was turning in the inquest. The family, perfectly understandably, declined an adjournment. They were anxious to bring the terrible episode to an end and bring closure to an appalling experience.
I have a number of concerns and queries about what happened. First, I accept that companies involved in the business of collecting debt have to deal with people who may attempt to deceive and mislead, and that mechanisms that assume the integrity of those sought are probably unrealistic. However, this case highlights how reasonable approaches to handling data, maintaining its quality, verifying information and dealing with potentially vulnerable people are readily neglected. In several areas, companies involved in the case appear to have followed neither the voluntary code of their own industry nor the Office of Fair Trading guidance.
take all possible steps to verify that the person being pursued is in fact the debtor.
Thames Credit appears to have used Experian data carrying a Gone away marker, unless it is claimed that that information was not passed on by Experian, in which case Experian are partly at fault. However, Experians terms and conditions in selling data to a third party make it clear that the data offered is
not intended to be used as the sole basis for any business decision,
and the clientin this case, Thames Creditagrees to take reasonable steps to confirm the identity of a debtor before taking any action to recover the relevant debt where a home address has not been provided. In Thames Credits submission to the coroner, it indicates no use of any other source than Experian, and it asserts through its solicitor that
the overall accuracy of such data-matching is in the region of 98 per cent. and therefore high.
However, that is not the view of people working in the industry, who regard Experian as providing data that is a first point of call for someone seeking to trace a debtor, and not as a desperately reliable source of where that person is.
As my story reveals, it had already been identified that Mr. Noorullah no longer lived at that address, if he ever hadand of course he had not. Indeed, one source from the industry has told me that reckless use of unverified and completely incorrect address information by debt collection agencies is widespread. If so, this terrible case with a tragedy attached to it is merely the most extreme end of a spectrum of practices that are no doubt going on in many Members constituencies.
should offer maximum co-operation with the debtors nominated or chosen third party.
not ceasing collection activities whilst investigating a reasonably queried or disputed debt.
In this case, mail was returned. It is appropriate to contrast the actions taken by GE Capital and by Thames Credit. GE Capital immediately referred the doubt back to the agent who supplied the data, who regrettably did not check their source. It seems that they ceased mailing to this address and flagged the Experian file as Gone away. Thames Credit appears to have carried on regardless, despite returned mail and a phone call from Mrs. Brazier in which she made it clear that
Mr. Noorullah did not live at her address and was unknown to her. It is also possible that it received a call from CAB. These actions were based, it seems, on one piece of data which was at best dubious.
threatening to visit debtors without prior agreement,
which happened in this case, is an unfair practice when a debt is disputed. Correspondence from Thames Credit includes just such a threat. The letter with Mrs. Braziers handwriting on it demanding £15,670.70 threatened that should Mr. Noorullahof course, all the letters were addressed to himnot contact the company within 14 days, field agents would call at her address to discuss repayment. I am afraid that to a 61-year-old lady that sounds like a pretty heavy threat. At that point, she called the company and spoke to it, but not much good did it do.
One must also ask whether the negotiator involved at Thames Credit behaved reasonably. From Thames Credits own account, Mrs. Brazier made it clear that she did not know the man in question and that he did not live at her addressyet she was offering a large payment. Surely that should have triggered concern that the company was dealing with an anxious and confused personbut the payment was banked and the correspondence continued to come.
It should be the case, where an address is queried and it has been provided by a third partyin this case, DataTracethat at the very least, as part of the quality control in the contract, the doubt should be referred back to the source. That was not done by Westcot earlier in the saga. Had that happened, the subsequent mismanagement of erroneous data would have been irrelevant.
This has been a grim story, and a terrible experience for Mrs. Braziers family. They wish me to ensure that, as far as possible, such an experience should never be repeated. I share that wish. From my understanding of the issues in the case, the Office of Fair Trading should review the performance of the companies involved and their compliance with its code. The Information Commissioner should also examine their data management practices. The industry body may also wish to consider the compliance with its code in this case. The family and I stand ready to assist in all those matters, and I look forward to the Minister's reply.
The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Mr. Gareth Thomas): In the traditional way, I congratulate my hon. Friend the Member for South Derbyshire (Mr. Todd) on securing this debate. I commend him for the way in which he has set out his concerns. Having listened to his comments, I have to say that I share his profound concern about what has gone on in this case. As he rightly described, it is a truly tragic case that should not have been allowed to happen.
I should say at the outset that the Government are well aware that personal debt can become a great problem for individuals. That is why we are working across Departments to try to minimise collectively the number of people who become over-indebted, and to improve the support and processes for those who have fallen into unsustainable debt.
Mr. Fraser Kemp (Houghton and Washington, East) (Lab): On that point, I was moved to hear the speech by my hon. Friend the Member for South Derbyshire (Mr. Todd). It is a terrible tragedy. I congratulate the Government on allocating additional resources: field officers have been appointed to the regions to act on information and to target areas that are susceptible to that sort of debt collecting. Does the Minister agree that, as resources allow, we need to see more field officers who can tackle such practices, particularly in areas such as Sunderland, where we have had real problems, so that we can target some of the scum who prey on the elderly and vulnerable in our communities?
Mr. Thomas: I know that my hon. Friend and indeed a number of other hon. Friends have been particularly concerned to ensure that the illegal moneylending pilots in Birmingham and Glasgow are rolled out across the country to target the loan sharks who, as he said, prey on those people who are perhaps desperate for credit. I welcome his interest. I know that he has been concerned that Sunderland should be targeted and receive support from those pilots. I can confirm that Sunderland will be covered. Obviously, we would want to receive any evidence that he or organisations operating in his constituency have about the activities of loan sharks.
The case that my hon. Friend the Member for South Derbyshire set out so clearly is a powerful reminder to us all in government, and indeed in the House, that the work to tackle over-indebtedness continues to be important and that we cannot afford to let up our focus on it.
What makes this case even more shocking and tragic is that Mrs Brazier did not even owe the money that she was being hounded for. Clearly, it seems that serious errors were made in the case. As my hon. Friend rightly described, the issues highlighted by the case include complaints alleging that Westcot, DataTrace, Thames Credit and GE Capital, which all hold consumer credit licences, failed properly to investigate Mrs. Brazier's claim that she was not responsible for the debts for which she was being pursued. Mrs Brazier should not have been put in that position. That failure lies at the heart of the tragedy.
We do of course need to establish the full facts, but somewhere along the line something has gone seriously wrong. I will seek to do what I can to make sure that appropriate action is taken. I can confirm to the House that I am writing to John Fingleton, chief executive of the Office of Fair Trading, setting out my concerns about the case. I am confident that the OFT will be looking into the circumstances surrounding the case and will take appropriate action.
This was a preventable tragedy, it would seem. A number of measures could have been taken. For example, Mrs Brazier could have been advised to ask the Information Commissioner to intervene, in particular as to whether the processing of her data complied with the Data Protection Act 1998, which says that information held on an individual must be accurate.
In the first instance, the Information Commissioners Office would normally encourage the individual to write to the organisation direct and ask for its information to be corrected. If that does not happen, the ICO can investigate and take enforcement action. Given that, I
will write to Richard Thomas, the Information Commissioner, to ask him to consider whether there has been a breach of the data protection rules and to take any action necessary.
Even though it would seem that Mrs. Brazier was unable to prevent the pursuit of this debt, there are still serious questions to be asked about the methods used in its pursuit. It is quite right in these circumstances, as my hon. Friend the Member for South Derbyshire has done, to put the spotlight on the regulation of this sector. Debt collectors are regulated, and have been for some time, under the Consumer Credit Act 1974. The OFT has a statutory duty under the Act to ensure that licences are only given to and retained by those who are fit to hold them. The OFT must, when determining whether or not a licensee is fit to hold a licence, consider any evidence that the licensee has engaged in business practices that appear to be deceitful or oppressive or otherwise unfair or improper.
Debt collectors that hold a consumer credit licence need also to comply with specific fitness guidance that the OFT has issued covering the debt collecting sector. That guidance covers a number of practices; in particular it says that putting undue pressure on debtors is considered to be oppressive, while ignoring claims that a debt is disputed would constitute an unfair practice on the part of the debt collector.
As was the case here, debts are often disputed by those being pursued for the debt. The OFT says that debt collection agencies should make reasonable efforts to obtain from a creditor or other agency clients sufficient information about the debt. For example, the OFT would expect the debt collection agency to have checked the accuracy of the client data details it has received from the creditor and also, where possible, obtained a copy of the original consumer credit agreement.
If a licensed debt collection agency or creditor persistently fails to comply with the OFT's debt collection guidance or there is evidence to substantiate claims that the licence holder has engaged in unfair business practices, the OFT can ultimately revoke its licence. Since 2003, nine notices to debt collectors have been issued by the OFT that it was minded to refuse or revoke their licences.
It would seem that the conduct involved in the case we are discussing today might constitute a failure to comply with the OFT's debt collection guidance and would consequently be relevant to a consideration of fitness to hold a consumer credit licence. In addition to the current rules relating to the debt collection sector, we are also introducing new laws that will strengthen and add flexibility to the regulatory options available to the OFT in operating the consumer credit licensing regime. The OFT has been given new powers by the Consumer Credit Act 2006, which come into force in April 2008. These will allow the OFT to place requirements on licensees to modify conduct and impose financial penalties of up to £50,000 for a failure to comply with a requirement. The OFT will also have new information-gathering powers, enabling it more effectively to monitor compliance by seeking information from licensed businesses about their activities including, for example, their debt collection practices.
In addition, the Act also gives the OFT powers to take into account a company's competence lawfully to provide credit when assessing fitness to hold a licence.
From April next year, the OFT will move to a strengthened gatekeeper role, requiring the provision of more information from businesses engaged in high risk credit activities such as debt collection at the application stage in order to satisfy itself that the business will be credit competent. In some cases, it will commission an on-site visit and a report from Trading Standards.
Mr. Kemp: Many of the companies my hon. Friend talks about taking action against are actually wholly owned subsidiaries of big banks and building societies in the UK, and I think a little more focus on the attitude of those parent companies would generate a bit more attention in terms of punishment for inappropriate actions.
Mr. Thomas: My hon. Friend brings me on to a compliance review the OFT carried out on its debt collection guidance on which it published a report in December 2006. The key findings of that report were that although awareness about the guidance was high and there had been positive changes in industry behaviour since its issue, there was still more that the debt collection industry could do to improve levels of complianceas has been hinted at. I think that that is an important message and I will be writing to the main trade association, the Credit Services Association, along those lines. While we recognise the industry is making efforts to raise standards, there is clearly more that can be done.
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