Watchdogs Pursue 'Debt Letter' Tactics
The City watchdog has urged people to send it copies of letters from debt recovery companies purporting to be working on behalf of high street names.
The Financial Conduct Authority's request comes amid reports that some banks and utility companies have sent 'bullying letters' to those in arrears over payments.
The letters may appear to be written by outside debt agencies, with only a passing mention of an in-house connection between debt collector and creditor.
The City regulator told Sky News: "The FCA is unable to comment on the activities of individual firms, but we are aware of these reports.
"We would request that anybody who has further information about this type of practice passes it onto the FCA."
The Solicitors' Regulation Authority (SRA) said it was investigating a number of complaints that have given it "cause for concern".
SRA executive director Richard Collins said: "We will shortly be issuing guidance for in-house solicitors on our existing requirement that publicity must not be misleading.
"This will make it clear that they cannot use forms of words that give the impression that they are an independent law firm and not employed solicitors."
Lloyds Banking Group confirmed that it owned a Scottish-based subsidiary, Blair Oliver & Scott Ltd (BOS), which was used for sending out letters.
The bank insists BOS, which operated from 1991 to 2013, did not undertake legal recoveries - only debt collection.
It told Sky News: "Blair, Oliver & Scott Ltd ... functioned as a debt collection company collecting debts owed to companies within what is now Lloyds Banking Group (previously HBOS plc and Bank of Scotland groups) in relation to a range of accounts including Bank of Scotland and Halifax overdrafts, loans and credit cards.
"It also acted as a debt collection agent for companies outside the Group such as utilities companies."
RBS previously used independently regulated in-house law firm Green & Co, along with Triton Credit Services.
An RBS spokesperson said: "Our customers should never be in any doubt about who they are communicating with.
"We have reviewed our policies in this area and will stop the use of any solicitor or debt collection brand names in correspondence with our customers that could cause confusion."
A Barclays spokesperson said its in-house firm was being wound down and told Sky News: "All debt collections are now carried out under the Barclaycard name, following a decision we took in April this year to end the use of separate companies.
"Mercers Debt Collections Ltd previously managed some collections work on behalf of Barclaycard but it was made clear to customers that they were a company within the Barclays Group and collecting on our behalf."
The Student Loan Company (SLC) was recently revealed to have used a similar tactic, since 2005, over university tuition fee arrears beyond three months.
On July 1, SLC said: "We (have) developed new letters which removed reference to the Student Loans Company as a 'client' and increased the font size of the footer which said 'Smith Lawson & Company is a trading name of the Student Loans Company Limited.'"
The revelation of apparent widespread use of the third party letters comes after payday loan firm Wonga issued fake legal letters to 45,000 customers.
The FCA made Wonga pay more than £2m in compensation for the practice carried out over a number of years, including charging some borrowers administration fees.
The Law Society said Wonga's action may have amounted to blackmail. Shortly afterwards, City of London police said it would reopen its 2013 examination into Wonga's activities.