Crackdown after firms caught hounding sick patients in hospital for debts

In some appalling cases, firms were found to have hounded patients in hospital for money owed.

The revised Debt Collection Guidance sets out the standards expected of all businesses engaging in the recovery of consumer credit debts, including banks, law firms and tracing agents, as well as traditional debt collectors.

The guidelines were first laid down in 2003 and were last updated in 2006.

The updated version now includes specific business practices that the OFT considers to be unfair or improper, such as using Facebook, Twitter and other social networking sites to contact debtors.

It also advises debt collectors against contacting debtors at unreasonable times, or at inappropriate locations, for example, when they are a patient in hospital or late at night.

The guidance:

• Warns against constantly trying to take money from a debtor's account, when payment has already been declined, for two main reasons. Firstly, it could trigger bank charges. Secondly, if collection is attempted again without the debtor's knowledge, it could leave no money to pay more important bills, such as a mortgage.

• Highlights the responsibilities of all parties in making sure they have enough information to ensure the wrong person isn't pursued for a debt;

• Makes debt recovery businesses aware they should adopt appropriate practices and procedures for dealing with vulnerable debtors.

If firms fail to follow the guidelines, the OFT can force them to. If they still don't comply, companies could face a fine or have their licence taken away.

David Fisher, OFT director of consumer credit, says: "In the present economic climate, with many people, including those who may be particularly vulnerable, in financial difficulties, it is crucial they are treated fairly by companies recovering their debts.

"This updated guidance makes clear the standards the OFT expects of all businesses involved in debt recovery, including debt collectors, banks and law firms."