Receiving a letter from a debt collector is often an intimidating experience. In a joint letter published by the FCA, Ofcom, Ofwat and Ofgem, these UK regulators called on companies to improve their debt collection practices. The call comes after identifying shortcomings across the financial services industry, as well as the communications, water and energy sectors. Watchdogs state they will take "robust action" against firms that are putting consumers' mental health at risk by using threatening tones and inundating already vulnerable borrowers with letters, calls and emails about their debts.
When it comes to dealing with debt collection agencies, knowledge is power. In this article, we set out the laws creditors must abide by when recovering debt as well as your rights as a debtor.
Summary
- What is a Creditor?
- Why Do Creditors Use Debt Collection Agencies?
- What Legal Actions Can Creditors Take to Recover a Debt?
- Are Debt Collection Agencies Regulated?
- What are the Consumer Duty Rules?
- Do Debts Have Time Limits?
- What Counts as Creditor Harassment?
- How We Can Help
What is a Creditor?
First things first, what is a creditor? Simply put, a creditor is a person or business you owe money to.
Why Do Creditors Use Debt Collection Agencies?
If your creditor is a business, and they have repeatedly tried to get you to pay a debt to save money and time, they may pass your debt on to a professional debt collection agency that will pursue the debt on their behalf.
If the debt has been passed on to a debt collector, they will send you a letter notifying you of this fact. This will be the initial contact, and the letter will include details of how you can get in touch to pay the money owed.
What Legal Actions Can Creditors Take to Recover a Debt?
A creditor can contact you by phone, email, and post. Debt collection agencies can visit your home if they cannot contact you any other way, or if you fail to respond. However, they must give prior notice that they are coming and cannot enter your home without permission or force you to speak to them. If you ask them to leave, they must go and if they do not, you have every right to call the police if you feel threatened. You are also entitled to make a complaint to the Financial Conduct Authority (FCA).
One of the many myths regarding debt collection agencies is that they have the same powers as bailiffs and can come into your home or business and seize property. This is not the case. A bailiff is appointed by the Court to enforce a debt payment after a CCJ or other court orders have been granted. They will clearly identify themselves and allow you to check their identity and warrant before they enter your home.
Are Debt Collection Agencies Regulated?
All debt collection agencies should conduct their practices in compliance with the latest FCA guidelines. In addition, if your debt concerns one of the following, you will be protected by the provisions of the Consumer Credit Act 1974:
- Store cards
- Credit cards
- Store finance
- Personal loans
- Payday loans
- Hire purchase
- Catalogues
Consumer Duty and Debt Collection
The FCA’s Consumer Duty has raised expectations for collections. Regulated debt collection firms are expected to act to deliver “good outcomes” for retail customers. The Duty applies to open products and services from 31 July 2023, and has extended to closed products and services since 31 July 2024.
This outcomes-based regulation is reflected in the arrears rules. Conclusion 7.3 of the guidelines says firms should pay due regard to Principle 12 of the Consumer Duty and PRIN 2A of the FCA handbook when dealing with customers in or approaching arrears or in default.
Vulnerability is a key focus, and firms should take steps to understand and respond to customers in vulnerable circumstances, aiming for outcomes as good as for other customers. These rules can influence how a firm communicates, the time it allows, and the support it offers.
If your experience feels out of step with Consumer Duty debt collection standards, it may help to keep copies of letters and a log of calls and reports, before considering any next step.
Do Debts Have Time Limits?
Yes; Section 5 of the Limitation Act 1980 provides that the time limit for bringing a claim founded on a simple contract is six years. Most unsecured debts fall into this category, including credit cards, payday loans, and personal loans.
Secured debts, such as mortgage payments can be pursued for up to 12 years, even if the lender has sold the property and recovered part of the debt.
If the limitation period has passed on a particular debt, it is known as ‘time-barred’ and the creditor cannot continue to pursue the money owed.
What Can I Do if a Creditor Insists on Pursuing a Time-Barred Debt?
If a creditor is authorised and regulated by the FCA, then FCA guidelines provide that they cannot contact debtors concerning time-barred debts. If they do, you can make a complaint to the FCA.
What Debts Am I Not Responsible For?
You might not have to pay a debt if:
- It has been over six years since you made a payment or were in contact with the creditor (collection of the debt may now be time-barred by statute).
- You can prove the agreement's terms were unclear, or you were subject to undue influence when signing.
- When you signed the agreement, the creditor did not check properly that you could afford the repayments.
- If your debt is covered by the Credit Contacts Act 1974, you may not have to repay the debt if the creditor cannot produce a true copy of the original agreement.
Are Under-18s Responsible for Debt?
A person under 18 cannot legally be responsible for any debt that they owe. If an under-18-year-old enters into an unenforceable contract and refuses to pay, the Court may order them to return the goods or property received.
What Counts as Creditor Harassment?
Although creditors are entitled to chase you for payment, they cannot harass you. Behaviour that may be considered harassment includes:
- Contacting you multiple times per day
- Visiting your home repeatedly when you have told them not to
- Phoning you early in the morning or late at night
- Using more than one debt collector at a time to chase you for payment
- Pursuing you on social media
- Sending fabricated letters that look like court forms
- Threatening you verbally or physically
- Embarrassing you in public
- Refusing to listen when you say you do not owe the money
- Pressuring you to make bigger payments than you can afford
What Should I Do If I am Being Harassed by a Creditor?
The first action you must take to deal with creditor harassment is to collect evidence of the behaviour you consider has gone too far. Keep all texts, WhatsApp messages, and emails, note the time of any phone calls, and get people who live with you or your neighbours to provide witness statements concerning the harassment they have seen.
Next, you should write to the creditor and state that you are being harassed, which is a criminal offence, and you demand this to stop. A Solicitor can draft a letter on your behalf.
Your creditor has three business days following receipt of your complaint to respond informally. This could be by phone or email. A final response letter might take longer. Your creditor also has to report your complaint to the FCA.
If complaining to the creditor does not achieve positive results, you will need to contact the relevant professional body that regulates the creditor. Your Solicitor can help you identify the regulator and draft a complaint letter for you.
Are Loan Sharks Legal in the UK?
Loan sharks are lenders who charge high-interest rates and use pressure tactics to collect payments. They prey on vulnerable people who are desperate for money. Loan sharks are illegal in the UK and are subject to criminal penalties and enforcement. If you have fallen victim to a loan shark, contact an experienced solicitor immediately.
Does Payment Protection Insurance Cover Debt Payments?
Yes, Payment Protection Insurance (PPI) covers payments on an insured loan or credit card debt if you cannot pay due to circumstances such as being made redundant or suffering a serious illness.
How We Can Help
If you are in financial difficulties and facing insolvency, we can offer you clear, practical legal advice on how to navigate the law relating to debt recovery and comply with your legal obligations. Contact us via email for more information.
Information reviewed and updated 10th March 2026 | This article is not a substitute for specific legal advice. | Image by gpointstudio on Freepik
