Starting a Debt Collection Agency

  • Price: £5.99
  • Published: June 2016
  • Type: Business Opportunity Profile
  • Format: PDF
  • What qualifications and skills are required?
  • Key market issues and trends
  • Trading, commercial and legal issues
  • Legislation
  • Useful contacts

Debt collection agencies are engaged by commercial creditors to secure payment from private and commercial debtors on their behalf. This typically involves tracing debtors, negotiating payment plans, collecting payments, deducting the agency's fee and transferring the balance to the client. This model of debt collection is described as the 'contingency model', as payment of an agency's fees is contingent on successful debt collection.

Some debt collection agencies, particularly established agencies, also purchase debts. However, debt purchasing is not covered in this profile.

Typical clients of debt collection agencies include firms providing goods or services under hire-purchase agreements or on credit, utility companies, banks and building societies, housing associations, and local authority and central government departments such as HM Revenue & Customs (HMRC), the Department for Work and Pensions, the Ministry of Justice and local council business rates departments.

Debt collection agencies in the UK must be authorised by the Financial Conduct Authority (FCA), or be exempt from authorisation as an appointed representative of an FCA-authorised firm. For the purposes of authorisation, the FCA regards self-employed debt collection agents trading alone and partnerships of more than one agent as 'firms'.

This profile provides information about starting up and running a debt collection agency that collects private and commercial debts. It describes the skills required, the training available, the current market trends and the key trading issues. It also explains the legislation that must be complied with and provides sources of further information and support.

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