Special measures to curb violent debt collectors
In the light of a flurry of complaints from debtors regarding intimidating tactics of outsourced recovery agents hired by banks, leasing and finance companies, the Central Bank (CB) has recently issued tough guidelines for those financial institutions.
Tactics bordering on ‘ thuggery’ are used in the seizure of leased vehicles causing embarrassment to vehicle owners and their passengers, several affected persons complained.
Financial institutions have been directed to establish special counters to entertain such complaints of borrowers.
The CB will also open a separate window to inquire into incidents of intimidating customers by debt collectors and seizing leased vehicles if lease installments are not made on time.
The aim is to bring relief to borrowers facing harassment from outsourced recovery agents, a senior official of the CB told the Business Times adding that if the CB receives any written/ verbal complaints against the conduct of any outsourcing service provider, it has the right to suspend such outsourcing arrangements upon further investigations.
According to the CB directive, banks and finance and leasing companies should maintain a special counter and assign an officer with the duty of handling the complaints and management information in each branch or office.
These institutions have in place a written procedure for receiving complaints and steps to be taken to resolve such complaints; acknowledge the receipt of any complaint in writing within a reasonably short period of time and inform the complainants of the procedure that will be followed for the resolution of the complaint.
Customers have been asked to seek affordable and efficient recourse through the Financial Ombudsman or in courts in the event the complaint is not resolved to their satisfaction.
The CB has warned financial institutions and banks against forcible lifting of vehicles when there is a default in payment of loans.
Even in case of mortgaged goods subject to hire-purchase agreements, the recovery process referred to in agreements also stipulates such recovery be carried out following due process and not by use of force.
Marketing and recovery functions could be outsourced by LFCs and licensed leasing companies subject to ensuring that the staff of the outsourcing service provider dealing directly with customers are properly trained to handle their responsibilities with care and prudence.
The CB has already issued guidelines to prevent such practices under the Financial Customer Protection Framework for all such companies.
Several customers told the Business Times that they have been threatened to repay their outstanding payments or face the threat of property, vehicles and other items being seized by organisations acting as collectors by certain finance and leasing companies.
CEOS of several leading finance and leasing companies told the Business Times that they have their own debt recovery division with specially trained officers and, now they have been directed not to use intimidating tactics in the debt recovery process.