The Debt Collection Act specifies the maximum debt collection costs based on the principal sum. The Debt Collection Act and decisions by the Regional State Administrative Agency mention that debt collection costs should be proportioned to the outstanding principal. Why is it more of a rule than an exception that the debt collection costs for low principal sums are at the above-mentioned maximum level of €14?
In my latest article, I talked a little about the ethics of debt collection as a concept. Let’s delve deeper into how we in the industry could best make the realisation of ethics concrete in our operations.
Lower debt collection costs would benefit everyone
With regard to debt collection costs, the Debt Collection Act states that “the debtor must compensate the creditor for reasonable expenses arising from a debt collection.”
Clients have the power over this. I’d hope that clients would discuss it with their debt collection partners. While providing customers with more reasonable debt collection costs, we would improve the debt collection sector as a whole. After all, you rarely hear positive things about the debt collection industry.
“Kickback” on debt collection costs is prohibited by law. This means that debt collection costs must not be shared between the client and the debt collection agency. Some debt collection operators circumvent the law by paying kickbacks or signature bonuses on invoice forwarding; after all, the Regional State Administrative Agency does not supervise invoice forwarding, only debt collection.
Reasonability of debt collection costs
I believe and claim that the debt collection sector is in need of changes. A Government Bill has been issued concerning the cost ceiling for corporate debt collection. It is a shame that the reform does not clarify reasonable consumer debt collection costs for low principal sums. The unclear regulation has led to the Regional State Administrative Agency and the Finnish Competition and Consumer Authority having to assess the reasonability of debt collection costs for small principal sums on a case-by-case basis.
It would certainly benefit everyone to add the reasonable amount of debt collection costs for small principal sums to the legislation. This way, there would be fewer requests for clarification from the Regional State Administrative Agency to debt collection agencies, while it would be easier for the consumer to check the justification of debt collection costs at their will.
Let’s revise the traditions of the industry
At CreditVisor, we are already at the forefront, working for this reform. Our operations are solidly steered by our values: responsibility, transparency and caring. In accordance with our values, we collect small consumer receivables at lower debt collection costs. The amounts of debt collection costs are agreed upon on a customised basis with the client.
We promise to always find the best solution for the client and end client.
Joona Hertola, CEO of CreditVisor
Source: https://finlex.fi/fi/laki/ajantasa/1999/19990513#P9 (Finlex.fi: Laki saatavien perinnästä)
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