What Are Unfair Debt Practices?
Unfair debt practices refer to actions by debt collectors or lenders that go against the rules set out to protect consumers in the UK. These practices are prohibited under laws such as the Consumer Credit Act 1974 and guidelines from the Financial Conduct Authority (FCA), which regulates how financial firms must treat people in debt.
Examples of unfair behaviour include harassment – such as frequent or threatening phone calls, visits at unreasonable times, or contacting you at work without permission. Debt collectors or lenders must not give misleading information about the amount you owe, your legal obligations, or what might happen if you don’t pay. Charging unreasonable fees or adding excessive interest to your debt is also considered unfair.
You have clear rights when dealing with debt. Lenders and debt collectors must treat you fairly, provide accurate information, and allow you reasonable time to repay. If you feel you are being treated unfairly, you have protections under UK law and can seek help. To better understand your entitlements, you can read more about money and debt rights and your rights during debt collection.
Recognising unfair debt practices early is important, as these behaviours can cause stress, make your financial situation worse, and even affect your mental health. By knowing your rights and the standards debt collectors must follow, you can take action to protect yourself and seek support if needed.
Common Examples of Unfair Debt Practices
Unfair debt practices can take many forms, and understanding what counts as unacceptable behaviour is crucial for protecting your rights. Some of the most common examples include:
Harassment by creditors: Repeated phone calls, threats, or pressure tactics are not allowed. If you’re experiencing persistent or aggressive contact, it may qualify as harassment by creditors, which is strictly regulated under the Consumer Credit Act 1974 and guidance from the Financial Conduct Authority (FCA).
Illegal debt collection methods: Debt collectors must follow the law. Practices such as using threatening language, misrepresenting their powers, or visiting your home without notice are considered illegal debt collection and are prohibited by the FCA’s rules.
Mis-selling of credit products: If you were sold a loan, credit card, or other financial product without being given clear information, or if the product was unsuitable for your needs, this could be mis-selling of credit products. This goes against the FCA’s principles of fair treatment for consumers.
Unauthorized or excessive charges: Lenders and debt collectors are not allowed to add fees or charges that are not agreed upon or that are unreasonable. If you notice unauthorized or excessive debt charges on your account, this may breach your rights under the Consumer Credit Act and FCA guidelines.
Unfair contract terms and fees: Some agreements may include unfair contract terms and fees that trap consumers in cycles of debt or make it difficult to repay. The Consumer Rights Act 2015 protects you from terms that create a significant imbalance to your disadvantage.
All of these practices violate your rights as a consumer and are closely monitored by the Financial Conduct Authority (FCA). If you believe you have been treated unfairly, it’s important to understand your options and seek further advice.
Your Rights When Facing Unfair Debt Practices
When dealing with debt collectors or lenders, you have clear rights and protections under UK law. Unfair debt practices – such as harassment, misleading information, or unreasonable charges – are not allowed, and several rules are in place to safeguard you.
The Financial Conduct Authority (FCA) is the main regulator for debt collection and lending in the UK. The FCA sets strict standards for how firms must treat customers, including rules that require fair, honest, and respectful behaviour. Debt collectors and lenders must give you clear, accurate information about your debt and cannot use confusing or misleading language.
You are protected from harassment, which means debt collectors cannot contact you excessively, use threatening language, or discuss your debt with others without permission. They must also avoid unfair charges or adding unreasonable fees to your account.
There are legal limits on what debt collectors can do. For example, they cannot enter your home without your consent, take your belongings without a court order, or pretend to have legal powers they do not possess. These protections are reinforced by legislation such as the Consumer Credit Act 1974 and the FCA’s Consumer Credit Sourcebook (CONC).
Understanding your banking rights and borrowing money rights can help you recognise when you are being treated unfairly and what steps you can take to protect yourself. If you believe your rights are being ignored, you have the right to make a formal complaint and seek further support.
How to Complain About Unfair Debt Practices
If you feel you’ve been treated unfairly by a debt collector or lender, it’s important to take action quickly to protect your rights. The Financial Conduct Authority (FCA) sets out rules for fair treatment, including the Consumer Credit Act 1974 and guidance on debt collection practices. Here’s what you should do:
1. Gather Evidence
Keep detailed records of all contact with the debt collector or lender. Save letters, emails, and texts, and make notes of phone calls – include dates, times, and what was said. This evidence will help support your case if you need to make a formal complaint.
2. Raise Your Concerns Directly
Start by contacting the company involved. Explain clearly why you believe their behaviour is unfair, referencing any relevant rules or guidelines. Most lenders and debt collection agencies have formal complaints procedures you can follow. Acting promptly can increase your chances of a quick resolution.
3. Escalate If Necessary
If you’re not satisfied with their response, or if they don’t reply within eight weeks, you can take your complaint further. The Financial Ombudsman Service offers a free and impartial way to resolve disputes between consumers and financial businesses.
For more detailed guidance on the complaint process, including what to include and how to escalate your issue, see our page on how to complain about unfair debt practices.
Remember, acting swiftly and keeping thorough records will help you stand up for your rights and ensure your complaint is taken seriously.
Understanding Debt Purchasing and Your Data
When you fall behind on payments, lenders may decide to sell your debt to another company – this is known as debt purchasing. The new owner, often called a debt purchaser or debt collection agency, then takes over responsibility for collecting the money you owe. It’s important to know that the sale of your debt does not affect your legal rights as a consumer.
When your debt changes hands, the new owner must inform you in writing. They should clearly identify themselves and explain how to contact them. You should continue to receive fair treatment, and the rules set by the Financial Conduct Authority (FCA) still apply. This means debt purchasers must not use harassment, misleading information, or unfair charges when contacting you.
Unfortunately, some debt purchasers may use unfair or aggressive tactics. If you feel you are being treated badly, it’s important to know your rights and what steps you can take. You have the right to ask for proof that the company owns your debt and to receive clear information about what you owe.
Your personal data is protected under UK law, including the Data Protection Act 2018 and the UK General Data Protection Regulation (UK GDPR). When your debt is sold, your information can only be shared with the new owner for legitimate purposes, such as collecting the debt. The new company must handle your data lawfully and securely.
If you are contacted by a debt purchaser, always verify their legitimacy before responding. You can ask for written confirmation of the debt and check that they are authorised by the Financial Conduct Authority (FCA). For a more in-depth explanation about how debt sales work and how your information is used, see our guide on debt purchasing and your rights.
Harassment and Illegal Debt Collection
When dealing with debts, it’s important to know that creditors and debt collectors must follow strict rules about how they contact you. Harassment by creditors is illegal in the UK, and there are clear guidelines set out by the Consumer Credit Act 1974 and enforced by the Financial Conduct Authority (FCA).
What Counts as Harassment?
Harassment by creditors is defined as any action that makes you feel distressed, humiliated, or threatened. This can include frequent or excessive contact, using abusive language, or trying to embarrass you in front of others. For a more detailed explanation, see our page on harassment by creditors.
Examples of Illegal Debt Collection Tactics
Some debt collection practices are not just unfair – they are illegal. These include:
Contacting you at unreasonable times, such as very early or late at night
Threatening you with violence or legal action they can’t take
Pretending to be court officials or bailiffs when they are not
Disclosing your debt to others without your permission
For more details on what counts as illegal debt collection, visit our dedicated page.
Your Rights and How to Report Harassment
You have the right to be treated fairly and not face intimidation or undue pressure from anyone collecting a debt. If you believe a creditor or debt collector is breaking the rules, you can make a complaint to the Financial Conduct Authority (FCA), which oversees the conduct of debt collection agencies. You can also report the behaviour to your local Trading Standards office.
Legal Consequences for Debt Collectors
Debt collectors who engage in harassment or use illegal tactics can face serious consequences, including fines, loss of their licence to operate, or legal action. The FCA has the power to investigate and penalise firms that do not comply with the law, helping to protect consumers from unfair treatment.
If you’re experiencing any of these issues, it’s important to know your rights and take steps to protect yourself.
Unfair Charges and Contract Terms
When dealing with debts, it’s important to be aware of how unauthorized or excessive debt charges can be unfairly added to what you owe. These might include charges that were not clearly explained in your agreement, or fees that are much higher than what would be considered reasonable. Sometimes, lenders or debt collectors use unfair contract terms and fees to increase the cost of your debt, making it harder for you to pay off what you owe.
Under UK law, you have the right to challenge unfair charges and contract terms. The Consumer Rights Act 2015, Section 62 protects consumers from unfair terms in contracts, which means any fees or conditions that put you at a significant disadvantage may not be legally enforceable. The Financial Conduct Authority (FCA) also sets out rules for how lenders and debt collectors must treat customers fairly, including guidance on what counts as fair and reasonable charges.
Unfair fees can quickly increase your total debt, making it more difficult to manage your repayments and causing unnecessary financial stress. If you think you have been charged unfairly or that your debt agreement contains unfair terms, it’s important to take action. Start by reviewing your contract and any statements carefully. If you spot charges or terms you believe are unfair, you can raise a complaint directly with your lender or debt collector. If you are not satisfied with their response, you may be able to escalate your complaint to the relevant ombudsman or regulatory body.
Understanding your rights is the first step to protecting yourself from unfair practices. For more detail on what counts as unfair, explore our related guides on unauthorized or excessive debt charges and unfair contract terms and fees.
Related Topics to Help You Manage Debt Fairly
If you’re facing unfair debt practices, understanding your wider options can help you take control of your situation. Here are some related topics that offer practical advice and guidance:
Learn about managing debt to get tips on budgeting, prioritising payments, and dealing with creditors.
If your debts feel unmanageable, explore your options for insolvency and bankruptcy, including what’s involved and how the process is regulated by the Insolvency Act 1986.
Protecting your future is important – find out how debt can affect pensions and retirement, and what steps you can take to safeguard your pension rights.
Struggling with credit cards? Get straightforward advice on managing credit card debt to avoid escalating fees or unfair practices.
Understand how court fines and wage deductions work, and how they might impact your finances if you fall behind on payments.
If you’re on Universal Credit, there is help with debt and rent arrears on Universal Credit to support you through difficult times.
If you’re going through a separation, learn about pension sharing during divorce and how debts may be divided.
Be aware of issues around mis-sold debt add-ons, such as unnecessary insurance or extra products added to your loan or credit agreement.
Exploring these topics can help you make informed decisions and ensure you are treated fairly when managing debt.
