North Wales MS Mark Isherwood has today expressed concern regarding the practice of some debt collection agents in Wales, but warned that Welsh legislation to regulate them would be largely unenforceable.
The purpose of the Bill, put forward by Jack Sargeant MS, would be to:
a) place a duty on public service providers to only use debt collectors who sign up to a Code of Conduct that protects vulnerable people in a cost-of-living crisis;
b) introduce a Wales-wide Code of Conduct for all debt collection agents registered in Wales; and
c) further empower local trading standards authorities to take action against agents who mislead residents about their powers and residents’ rights.
However, speaking in this afternoon’s Debate on ‘a Member's Legislative Proposal; A Bill on the regulation of debt collectors”, Mr Isherwood outlined issues with the proposal.
He said:
“Given the horror stories we have all heard, we fully share concern about the issue that this proposed Bill seeks to address and support the intent behind it.
“However, Senedd Lawyers have advised that a Bill to regulate debt enforcement agents would be outside the legislative competence of the Senedd. This is on the basis that the ‘enforcement of orders of the courts’ is a reserved matter’.
“Senedd Lawyers additionally advise that ‘a Bill to regulate debt collection agents would also likely fall outside the competence of the Senedd’.
“This is on the basis that aspects of debt collecting are regulated by the Financial Conduct Authority, and therefore would likely relate to the reserved matter of ‘financial services’.”
Mr Isherwood also raised issue with the call to “place a duty on public service providers to only use debt collectors who sign up to a Code of Conduct that protects vulnerable people in a cost-of-living crisis”, pointing out that vulnerable people need to be protected at all times.
He added:
“In terms of the “Code of Conduct”, Senedd Lawyers added that in order for this to be within competence, it would have to be a “voluntary” code and could not be enforceable as this would amount to ‘Regulation’.
“I would therefore be grateful if the Member could explain how he would ensure such a Code of Conduct was within Senedd competence – and, if it is intended only to be voluntary, how effective, or workable that would be?”
Mr Isherwood also emphasised that it is already a legal requirement for a debt collection agency to register as a debt collection agency that is legally able to act and recover debt on behalf of a creditor.
He added:
“Further, once they have registered, they must follow the guidelines set out by the Financial Conduct Authority, the Financial Ombudsman Service, and the Competitions and Markets Authority, each of which may also supervise these businesses.
“Recovery Actions that could be deemed harassment or abusive and are not permitted already include ‘entering a debtor’s home without consent’ and ‘pressuring a debtor to make payments they cannot afford’.
“The real issue is therefore one of enforcement, not largely unenforceable legislation.”