Fairer debt collection fees urged

Consumer rights advocates have urged the government to roll out rules for fair debt collection fees, saying some are still resorting to unscrupulous tactics.

“Debt collection expenses demanded by some lenders are brutal. It is important for the government to work harder to solve this problem,” said Narumon Mekborisut, head of the Consumer Rights Protection Centre at the Foundation for Consumers (FFC).

The FFC and networks across the country received 392 complaints about financial and banking issues between Jan 1 and Sept 30.

She said 349 concerned debt issues — credit card debts comprised 160 cases, hirepurchase debts accounted for 105 cases and informal debts made up just four cases.

Another 150 cases were unrelated to debt-collection fees while 11 concerned unlawful ways of collecting debts, she noted.

Consumers complained of exorbitant fees on top of high interest levels. Creditors usually impose debt collection charges on borrowers but there is no clear ceiling for this, which opens the window for debtors to be overcharged, Ms Narumon said.

She asked the Finance Ministry to introduce regulations to control the charges.

Consumers also complained about harsh tactics such as “name and shame” posts on social media, dropping by people’s workplaces or calling them at unsociable hours.

Most of these methods are in breach of the Debt Collection Act, which has been in force for three years, she said.

“The problem is many debtors don’t know the act exists. The government needs to work harder to educate consumers about their rights and what debt collectors can and can’t do,” said Ms Narumon.

Others complained that police turn a deaf ear to their pleas.

FFC secretary-general Saree Ongsomwang said some nano-financing and picofinancing lenders, granted licences to operate by the Finance Ministry, were found to have demanded interest rates of up to 36% per annum.

“The government should ensure interest rates don’t exceed 15% by law,” Ms Saree said.

Meanwhile, a joint survey in August led by the FFC’s Smart Buyer magazine suggests most people’s debts stem from property loans. According to the poll, 77.5% of respondents owed money. Of them, 37.6% had taken out real estate loans, followed by auto loans (28.2%), informal loans (18.8%) and personal loans (17%).

Most debtors (36.4%) sought loans from commercial banks, followed by financial or leasing firms (16.7%) and informal creditors (15.3%).

Sing Singkajorn, who helped conduct the poll, said 40% of debtors owe less than 100,000 baht, while 53% have defaulted on previous loans.