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The Credit Services Association (CSA)
Blog: Introducing the new updated CSA Code of Practice for the debt collection and purchase sector
A qualified solicitor, Sara de Tute has over 10 years’ experience as a Legal & Compliance Director within the debt collection sector. She is a member and former president of the Credit Services Association’s (CSA) Board of Directors and launched the new version of its Code of Practice at an event at the House of Commons on 5 July 2017.
The Credit Service Association’s (CSA) Code of Practice has been through a great deal of transformation since it was first introduced in 1985 (and certainly since the association was launched in 1906).
When the Code of Practice was first launched, it was a mere two sides of A4 – and many still wish it was so succinct! However, despite being only two pages long, it contained enough to set a standard for debt collection that didn’t exist before. Clients started to demand that this standard was used, whatever the type of debt. The Code has now developed into a much longer, more in-depth document which acts as a ‘common denominator’ across all types of debt, from financial services and utilities, to Government debt collection, which are all subject to different forms of sector-specific regulation. This helps bring clarity and consistency for customers in expectations of debt collection practice.
Used by the Office of Fair Trading to produce its own Debt Collection Guidance in 2003, which was further updated in 2006 and 2011 with strong influence from CSA, the Code now forms the basis of the Financial Conduct Authority’s (FCA) CONC rules. So not only does the Code have a proud tradition dating back over 30 years, it continues to help deliver best practice and drive high standards, based on strong relationships with regulators.
Creating a more even playing field in debt collection best practice
The Code’s aim has always been to promote best practice in debt collection and across the debt purchase arena regardless of the type of debt. However, with the introduction of the FCA’s regulation of consumer credit, a number of CSA member firms fell outside of the new regulator’s regime due to the specialist services they offer such as collection of utility or commercial debt. This meant that there was a ‘perceived’ vacuum in terms of consistent regulation and rules for that group of the membership, and we wanted to fill that space to ensure fair customer outcomes and a more even playing field with a new updated version.
Reflecting new developments in debt collection
The new Code of Practice reflects major developments in debt collection in recent years including improvements to understanding and managing of financial difficulties and mental health issues. It now includes more detail on vulnerable circumstances which customers may find themselves in. We have also made substantial updates to the data protection section in light of the new General Data Protection Regulation (GDPR) which is due to come into force next year, and the growing importance of due diligence when purchasing debts so it is clear exactly what is being bought, is also reflected within the new Code. The Lending Standards Board’s Standards of Lending Practice and Ofcom’s regulation around ‘persistent misuse’ have also been incorporated to take account of the full spectrum of relevant regulation and best practice.
We feel that there is definitely a place in 2017 and beyond for a Code of Practice which complements statutory regulation and as an association we work hard to demonstrate professionalism of the industry, drive up standards, and assist in identifying issues as early as possible. There’s also a place for a Code of Practice where statutory regulation doesn’t exist, for example, in the utilities sector. We want to give confidence that CSA members are all working to the same high standards regardless of the type of debt they are collecting.
Improving business practices in the debt collection sector
As the industry has evolved, so has our Code, and with the release of this new version we have incorporated elements of the FCA’s regulatory framework by introducing new Principles of Business, adding context and industry relevance. The Code now not only promotes best practice in terms of collections activity, but also what the CSA expects of its members in terms of their business set up, the importance of financial stability, employing people with the right skills, providing staff training, and most importantly, incorporates treating all customers fairly.
Building confidence in debt collection
Ultimately, our aim as the UK trade body for the debt collection sector is to build confidence in the industry, building trust and credibility for our members who have worked hard to professionalise themselves and transform their cultures to put the customer at the heart of what they do over the past 30 years. The Code reinforces all elements of best practice which provides a high level of confidence for our members’ clients, their prospective clients, regulators, consumers and industry stakeholders alike.
The revised code will be implemented from 1 January 2018.