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Debt Collection News Roundup –May 2017

Here at Access Credit Management we‘re committed to making sure  our readers are up to speed with what’s going on in the industry so once a month we publish a News Roundup.  Bringing our readers all the latest news within the sector so that you are fully informed. It would be interesting to know what you, the readers, think of the stories that feature here.  Please join in by adding your comments on our Facebook page, tweeting on Twitter or email us if you come across anything that you think we should include.

Firstly the news that debt collection rules due to come into force from October are likely to make collecting a debt from an individual more difficult for businesses.  Under a new pre-Action Protocol for Debt Claims, any individual will have 31 days to respond to letters of claim pursuing the debt, rather than the current 21 days.  Then, if the individual has still failed to pay, a further letter must be sent, giving another 14 days to pay.  This doubles the time that individuals have to pay the debt before their creditors can being court proceedings.  The government hopes that this will encourage more people to resolve debts without resorting to court proceedings.  The new rules will not apply to B2B debt collection issues.

Next comes the bizarre story of a former Barclays customer who has received a letter from a debt collection agency claiming that they owe Barclays £850 on an account that the customer closed back in 2002.  When the case was investigated, it was discovered that the account had been £10 in credit at the time it was terminated so the system was unable to close the account completely.  The account just moseyed along over the years with charges and interest accruing.  Because the account featured a £700 overdraft limit, no action was taken by Barclays until that limit had been overtaken by the charges.  This sorry state of affairs demonstrates just how vital it is that customers ensure that banks have the correct correspondence address for the customer and that customers ensure that their accounts are totally empty when terminating them.

On an international basis, China’s determination to build a modern day Silk Road features a broad lending programme to help build ports, roads and rail links.  However, as the Belt and Road project grows, so do the risks to policy banks, commercial lenders and borrowers, all of whom are ensnared in projects with questionable logic according to financial analysts.  China’s Import Export Bank (EXIM) has imposed a debt ceiling for each country in order to contain the risks while the China Development Bank (CDB) has applied strict limits on sovereign borrowers’ credit lines to control the concentration of loans.  Infrastructure loans have so far been negotiated government to government with interest rates below those offered by commercial banks and extended repayment schedules.