Collections Policy - Peraloans.co.uk

All firms engaged in debt collection activities are expected to comply with the FCA’s “Consumer Credit Sourcebook” which applies to the collection of debt once an account is in default.

This document provides ethical standards to which everyone must comply. It cannot cover every eventuality. However it is expected that all staff will adhere to the spirit of these policies where the letter does not provide adequate guidance.

Previous versions of this document referred to the principles of how lenders treat their customers in accordance with the overarching principles of consumer protection and fair business practice as set out by the FCA. In general terms, Creditors should:

not use misleading or oppressive behaviour when advertising, selling, or seeking to enforce a credit agreement;
make a reasonable assessment of whether a borrower can afford to meet repayments in a sustainable manner;
explain the key features of the credit agreement, to enable the borrower to make an informed choice;
monitor the borrower’s repayment record over the course of the agreement, offering assistance where borrowers appear to be experiencing difficulty;
treat borrowers fairly and with forbearance if they experience difficulties.

In addition, there should also be:

transparency in dealings between creditors and borrowers;
disclosure of key contract terms and conditions, ensuring these are fair, clear and intelligible;
fair treatment of borrowers;
forbearance and consideration towards borrowers experiencing difficulty;
proportionality in dealings between creditors and borrowers.

Any breaches of these requirements may cause the Financial Conduct Authority, to take action against Western Circle Limited which could result in the loss of our consumer credit licence.

It is every collector’s responsibility to ensure that he or she understands the content of this policy, or to seek guidance where any doubts exists. Deliberate or careless breaches of this policy will be considered as a potential disciplinary matter and may result in the termination of their contract.

FCA Regulation

From 1 April 2014 all businesses previously regulated by the OFT are now regulated by the FCA. Every businesses’ focus should be to make the customer the centre of their business. Further, there are 12 principles that firms should be guided by:

Principle 1 a firm must conduct its business with integrity.
Principle 2 a firm must conduct its business with due skill, care and diligence.
Principle 3 a firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.
Principle 4 a firm must maintain adequate financial resources.
Principle 5 a firm must observe proper standards of market conduct.
Principle 6 a firm must pay due regard to the interests of its customers and treat them fairly.
Principle 7 a firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.
Principle 8 a firm must manage conflicts of interest fairly, both between itself and its customer and between a customer and another client.
Principle 9 a firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment.
Principle 10 a firm must arrange adequate protection for clients’ assets when it is responsible for them.
Principle 11 a firm must deal with its regulators in an open and cooperative way, and must disclose to the appropriate regulator appropriately anything relating to the firm of which that regulator would reasonably expect notice.
Principle 12 a firm must act to deliver good outcomes for retail customers.

Identifying and managing risk

Western Circle Limited is committed to providing a good service to consumers and treating them fairly. However, it is not always possible to reach a definitive view of what certain provisions of law and/or regulation mean. In those circumstances, Western Circle Limited will have to decide on the level of risk it is prepared to assume and how any risks may be mitigated. To do this, Western Circle Limited will do the following:

Identify the risk – Review subject matter in light of the legislation and regulation and identify any areas that may not satisfy the requirements or where compliance may be ambiguous.
Establish the potential effect of the risk – Identify what the effect of the risk arising would be. For example, would it lead to consumer detriment? Would it lead to the commission of an offence or breach of other regulatory obligations? How serious would those breaches be? If there is any doubt as to how serious the consequences of the risk would be or if the risk (in terms of regulatory risk or reputational damage) is significant, then legal advice should be sought.
Mitigate the risk – Consider what action could be taken to minimise the effect of the risk. Once mitigating steps have been identified, they should be agreed with our supervisors and implemented.
Record the risk – The nature of the identified risk and mitigation strategies should be recorded using the Risk Register.

General collection approach

The general principles of our collection strategy are as follows:

Borrowers should be expected to repay the money they have borrowed in accordance with the consumer credit agreement.
Ensure that the borrower’s current circumstances are fully assessed on a regular basis and show forbearance if they are in financial difficulty;
Act responsibly when collecting debt and adopt a best practice approach which complies with relevant legislation and FCA guidance; and
Collect debt in a way that avoids embarrassment to the debtor.

Treating Customers Fairly

We will communicate with our customers professionally and competently. We will give our customers full and timely information about their account, and we will communicate in a way that is clear, fair and does not cause offence.
We will act professionally and appropriately in the collection of loan repayments. We treat our customers with respect. We will not collect in a way that by its manner, frequency or timing could be seen as subjecting the customer or his/her family to alarm, distress or humiliation.
We will ensure that our customers are treated fairly in accordance with their financial circumstances. We strive to understand and help our customers deal with any financial difficulties. We will ensure that our customers understand their obligations and are given all relevant information regarding the options available to them. We will ensure that any arrangements to pay are affordable, both now and in the foreseeable future.
We will ensure that we act correctly within regulatory and industry code requirements. We will ensure that all relevant personnel are fully aware of the regulations and standards of conduct relating to all aspects of their role in dealing with customers for the purpose of loan collection.
We will respect our customer’s privacy and never divulge sensitive personal information to a third party without the customer’s written authority.

Methods of Contacting Customers

Mobile telephones (personal or business) may not be used to contact customers; all collections calls should be undertaken on company land lines.
We will not impersonate another person when attempting to contact or collect a payment from a customer.
Collectors will not call at the homes of customers’ friends, relations or neighbours unless this has been agreed with the customer. No mention should be made of the purpose of the call.
Written communication can be by SMS, letter or email. Whenever we write to borrowers, we must ensure that we look at how the document reads from the borrower’s viewpoint. It should be written in a way that is clear, simple and easy to understand.

Times for contacting customers

The hours collectors may contact a customer by telephone are 8am to 8pm on Monday to Saturday.
Telephone contact may be made on some Bank Holidays but excludes the following days:

Christmas Day & Boxing Day

Where telephone contact is made on a Bank Holiday it can only be between 9am and 4pm and you must respect the customer’s wish to decline to discuss their account and call back at another time.
You should also be aware that some customers may celebrate religious holidays on other days and you must respect their wishes if they ask to be called on a different day.
In cases where a customer confirms that they do not wish to be contacted by telephone at all but would rather communicate by letter/email, or if they ask to be contacted at specific times, you must respect their wishes and update the customer file accordingly.
The customer’s preferred telephone number will be used in the first instance. If there is no preference, any of the three listed contact numbers may be used, taking into account common sense and your knowledge of the customer’s whereabouts and circumstances.
Where no contact is made with the customer, the total number of call attempts must not exceed 6 per day.
No more than three telephone messages to personal lines such as home or mobile numbers or work telephone numbers should be left for a customer on the same day. Where messages are left on personal answering machines, your name, the company name and contact number should be left.
When leaving a message on a work answer phone only your name and contact number must be left.
If a customer has been contacted and an arrangement to pay has been discussed, further collection contact should not take place unless the agreed arrangement has not been kept, whereupon you may re-contact the customer to discuss the account.
If a customer has multiple accounts, each contact is one call, maximum two.
Collectors must ensure that accurate notes are made on the systems so that customers are not re-contacted unnecessarily.
If a customer has asked not to be contacted on a number, e.g. a work number he/she may not be telephoned on that number. The only exception is where a number has been discovered during the skip trace process.
If a customer states that it is inconvenient time to talk, you should arrange a call back at a more convenient time.

During the call

On all occasions when contacting a customer and where you know you are speaking to that customer, a collector must introduce himself/herself by providing their name, company name and reason for the call. DPA questions must be answered correctly by the customer.
When talking to anyone other than the customer i.e. a third party, you must only give a name and telephone number. You must not identify the company or purpose of the call as this may cause embarrassment to the customer.
When conducting a collections call the tone of voice can be assertive but not loud, offensive or aggressive. Language must be appropriate and professional with no swearing, no shouting and no patronising, threatening, sarcastic or accusatory behaviour.
You must not claim to be working for the courts, be a bailiff, or representing a legal firm unless this is true.
You must not claim to be working for the legal department unless you do.
Customers may choose to borrow money or raise funds from other sources to meet our cash demands but they must not be pressurised to do so.
Under no circumstances should collectors purchase goods from the customer with the intention of helping the customer to raise funds to pay the account. Nor should staff give or lend their own money to customers to help them pay their account. This act would be considered a breach of the Bribery Act and would be considered as gross misconduct.
All colleagues must take particular care when dealing with customers suffering from health problems, including mental health difficulties. When made aware of this you may request a Debt and Mental Health Evidence Form (DMHEF) from the customer, which can be provided by a health care professional. Collection activity should cease until the DMHEF is received (allow a maximum of 30 days for receipt).
When a customer presents a DMHEF, we should record its existence within the customer file, so that customer contact is handled sensitively and in accordance with the contents of the DMHEF. You must also ensure that permission to record the information is sought from the customer. These cases should then be dealt with by managers only.
You must not use the threat of legal action or court proceedings as a way of encouraging a customer to pay.
You must not imply or state that failure to pay a debt is a criminal offence, or that criminal proceedings may be brought.
When negotiating an arrangement to pay it is important to fully understand the customer’s financial circumstance before discussing the possibility of increased payments. You must not pressurise customers to make payments which they cannot afford to pay, particularly involving increases in current arrangements, large instalments or payment in full. Increased payments must be affordable now and in the foreseeable future.
You must not ignore or disregards claims that debts have been settled or disputed and continue to make unjustified demands for payments. Any such disputes should be resolved before any further collection activity or requests for payments are made. Examples of disputes may include an outstanding complaint or disagreement over loan balances outstanding.
You must not use threats to disclose information to third parties, e.g. partner/spouse or family members who are not on the loan agreement.
You must not exploit a debtor’s lack of knowledge or use unnecessary and unhelpful use of legal and technical language.
If a debtor informs you that they are entering into a Debt Management Plan you must request that their Debt Management Company provide us with confirmation as soon as possible and that upon receipt of the information, we will place the debtor’s file on hold for 30 days in order to arrange a repayment plan.

Identification of Customers and contact with Third Parties

Customers are of course permitted to nominate a third party to act or speak on their behalf. Third party authorisation extends to, but is not limited to, private individuals, DMAs, the Citizens Advice Bureau, Trading Standards, GPs, Solicitors, MPs and any other personal representatives, either with or without power of attorney. Before we can discuss a customer’s personal information with a third party signed written permission must be obtained from the customer and recorded on file.
Any request for information about a customer made by the Police or government body (whether local or otherwise) must be referred to Western Circle Limited immediately.
All ‘Inbound’ and ‘Outbound’ customer telephone calls require the customer to successfully complete an identification and verification process that adheres to the Data Protection Act, at all times before any information is disclosed.
We will not require an individual to prove that he/she is not the actual debtor who owes the outstanding debt (i.e. Produce passports, signature etc.).

Deceased Customers

When notified of a customer’s death and upon receipt of a death certificate, no further cash collection activity must take place.

Customers in the Armed Forces

Any dealings with armed forces personnel should be via their barracks in the UK or via their home address. Under no circumstances should calls overseas be made.
Before contacting any member of the Armed Forces, their base unit/barracks should be contacted in the first instance to see if they are on active duty or not.
Any customer known to be on active service outside of the UK or the Republic of Ireland should not be contacted by phone under any circumstances.
When making contact to base units/barracks, all Data Protection requirements must be observed at all times.

Arrangements to Pay

Where a customer is in financial difficulty and cannot make a payment, we will treat them sympathetically and will work with them to find acceptable minimum payments that can be agreed.
When appropriate we will advise them to get independent financial advice from a third party in order to resolve their financial difficulties, we will not inappropriately pass on debtor’s details to lead generators, debt managements businesses, creditors, debt collectors or brokers without the customers full authority.

Write-offs

All requests to write off any sum of any size must have the correct approval.

Collection Charges

Any collection charges applied to a customer’s account must be transparent (i.e. it is clear what activity has necessitated the charge) consistent (i.e. we do not apply charges to some accounts and not to others; we must be fair to all customers) and be proportionate to the cost we have incurred in undertaking the collection activity.
Where a collection has been undertaken and a charge is applied, there must be a corresponding record of the activity.
The limits for the maximum number of collection charges that can be applied to a customer’s account during the course of one calendar month are as follows:

Collection Activity	Charge	Maximum number of charges per month
Default Fee	£10.00	Once per loan

Limits are per account and not per customer.

Skip Tracing

Where a customer is not responding to collection activity, or letters are returned indicating that the customer no longer lives at the address on file, we will utilise tracing agencies to try to locate the customer in order to re-establish the relationship.

Outstanding Debt

Throughout the customer journey we will attempt to maintain appropriate contact with all our customers keeping informed of the status of their account and any outstanding debt.

Charges

In the event of non-payment or default by the customer we charge:

An initial missed payment fee of £10.00 should we fail to receive the agreed payment by 5.00 pm on the agreed repayment date;
Interest on all arrears, On top of the daily interest we add arrears interest of (0.8%-your loan daily interest) and at combined max rate of 0.8% per day. Under no circumstances we would charge more than 0.8% per day.
The interest on all arrears is capped at double the capital borrowed (not including legal charges). Whether the charge is applied (and if so, whether it is later reversed or cancelled) is at the Company’s discretion, giving consideration to the customer’s ability to pay and taking account of the customer’s specific circumstances in each individual case.

In the event that a customer believes that a charge has been debited unfairly we will review why the customer feels that this was unfair from the customer’s viewpoint and look to ensure the customer is satisfied. In all circumstances a full or partial refund of charges must be considered and in most instances a full or partial refund must be offered to the satisfaction of the Customer.

Debt Collection Agencies (DCAS)

The FCA has stated that a lender’s fitness will be called into question if it uses a third party that engages in questionable behaviour or improper practices. Equally, a lender must not ignore those practices.

Prior to passing the debt to a DCA we must provide notice to a borrower that the responsibility for recovery of the debt and/or in the case of debt selling the legal right to recover a debt has been transferred or assigned to the named third party debt collector.

Only one DCA should be used at any one time to avoid the repetitive and frequent contact being made with the debtor. A full history of the debt must be passed on to the DCA.

DCAs must ensure that reasonable offers to pay by installments are passed onto us and any payments received by the DCA must be passed onto us within a reasonable period of time.

Western Circle Limited will only contract with DCAs who are members of the Credit Services Association. Fees may be charged by the DCA to customers but these must be notified to the customer at the application stage within our Terms and Conditions.

Debt Management Agencies (DMAs)

When a DMA is instructed by a customer we will always work together with a DMA in an attempt to agree a mutually satisfactory arrangement.

Upon receipt of notification by the DMA that they are acting for the customer and upon receipt of their authority to act we should place the customer’s account on hold for 30 days. This time period will enable the DMA to assess their client’s account and make an offer to ourselves to repay the debt.

The statement of account prepared by the DMA should be examined carefully and if you believe the offer is too low you should state your reasons to the DMA.

Exclusions to our policy

In the case of new or renewal customers (repeat customers who have had an additional advance) we will not allow our loan to be managed by a debt counselling service if they were approached by the customer prior to the loan inception date. We will however not refuse to apply payment to the account.
We will not allow our loan to be managed by a debt counselling service if litigation proceedings have commenced. We will however not refuse to apply payment to the account.
We will not allow our loan to be managed by a debt counselling service if the loan agreement was signed within 30 days of inception of the loan, unless the customer has experienced a significant change in circumstances since the loan inception. Examples; Loss of job, reduction in standard working hours, illness preventing the customer from maintaining standard working hours, unexpected increase in expenditure due to a significant change in a partners circumstances. We will however not refuse to apply payment to the account.

In all instances we will actively work with the customer and show forbearance wherever possible.

Legal Action

We may take legal action to recover money due under a credit agreement. Such action is referred to as “civil” action, i.e. the action is taken in the civil courts – failure to pay debts is not a criminal offence and criminal proceedings cannot be taken.

We cannot state, imply or threaten legal action when it cannot legally be taken, or imply that legal action has already been taken if it has not.

Staff should not discuss legal action or the implications of such action with borrowers unless there is a likelihood of legal action being taken and one or more of the following applies:

The customer is unreasonably refusing to make payment;
The customer is refusing to provide suitable evidence to justify an offer of payment;
The customer is actively and unreasonably seeking to avoid the debt;
The customer is not prepared to make a firm arrangement to clear the debt or to take appropriate steps to deal with the matter;
The customer has failed to adhere to a previously agreed arrangement;
The customer has made a repayment offer which is unreasonable when his financial circumstances are reviewed.

Legal action should be taken only as a last resort and where it is reasonably certain that the debtor’s address is correct.

Customer Complaints

Any expression of dissatisfaction, whether justified or not, is deemed to be a formal complaint and must be handled as such. If you receive a complaint from a customer you should manage it in accordance with Western Circle Limited’s Complaints Policy