Walton Brown on debt collectio
House: New law to target debt collectors
Borrowers could have greater protection from the unfair practices of debt collection agencies if new legislation is passed.
The Minister of Home Affairs tabled a Bill to provide a “comprehensive licensing regulatory framework” for agents involved in recovering funds.
Walton Brown explained why the Debt Collection Act 2018 was needed and told MPs on Friday: “Historically, consumer transactions were presumed fair because it was assumed that buyers and sellers bargained from equal positions of power.
“Complaints by consumers, however, demonstrate that they are inherently at a disadvantage especially in the areas of consumer debt and the collection of that debt. Our current debt collection practices are creating further consumer indebtedness due to exorbitant interest and administrative charges.
“This indebtedness is compounded by the lack of transparency and accountability to the debtor within the industry.”
He said the Bill “provides oversight by a licensing authority” in a bid to “eliminate abusive practices”.
These could include circumstances when there is no proper verification of debt, predatory lending such as excessive interest rates or hidden charges, and making harassing phone calls.
One of the “most egregious” actions, Mr Brown said, is communication with other individuals or organisations, for example “discussing the debtor or their debt with a third party or providing information about the debtor to anyone without verifying the veracity of the information shared”.
He told the House: “I have heard complaints from Bermudians that they were refused a job because information was allegedly shared by a debt collection agency.”
The Bill would offer protection through “accountability and oversight”, with the introduction of a licensing authority and debt collection officer.
Mr Brown said: “Most importantly, it places the debtor on equal footing with creditors and collectors ensuring accountability by all parties who engage in the process of extending credit and debt collection.”
A consultation period is to run for six weeks, ending on September 14, and stakeholders such as the Bar Council, judiciary, debt collection agencies and businesses will be asked for input.
Mr Brown continued: “There will also be a public-relations campaign to obtain participation from the general public.
“At the conclusion of the consultation period the information will be reviewed and shared with the Attorney-General’s Chambers in order to consider amendments to the Bill, where necessary.”
He added: “I would ask all interested parties to use the six-week consultation period to provide their input and concerns to assist in producing an Act that will benefit consumers who are debtors, companies that extend credit and the agencies responsible for collecting debts.”