Threatening Creditors

In has long been an offence for a creditor to unduly pressurise someone who owes them money. It is a criminal act to harass a debtor or cause them distress and anxiety. This could be by sending threatening letters under the Malicious Communications Act 1988 or threats made under the Administration of Justice Act 1970. Furthermore, the Consumer Protection from Unfair Trading Regulations 2008 prohibits aggressive practices by creditors intended to pressurise customers into paying money.

Examples of illegal behaviour have been held to include:

  • contacting a debtor continually;
  • contacting the debtor late at night or at an unsociable time;
  • pressurising a debtor to sell property to pay the debt;
  • demanding money in such a way as to intimidate or embarrass the debtor;
  • making false claims, such as:
    • that a document is an official document when it is not;
    • being a court official or bailiff;
    • that court proceedings have been issued;
    • that non-payment is a criminal offence and the debtor could be sent to prison;
  • threatening to tell neighbours, friends or relatives about the debt;
  • ignoring disputes about the debt;
  • making threatening gestures;
  • requiring the debtor to pay all of the debt or installments which cannot be afforded;
  • suggesting that action will be taken which is not possible.

Although any of the above activities may well constitute a criminal offence, it must be remembered that simply asking for payment and anything reasonable in this context is not harassment and therefore not illegal. If in any doubt and you feel threatened, the Financial Services Authority publish guidelines and can be contacted for assistance.

In extreme cases of harassment, the courts have always been willing to issue injunctions to restrain a creditor applying undue pressure. Recently however, the courts have shown themselves prepared to go even further in enforcing the spirit of the law to protect the harassment of debtors. This was demonstrated in a case concerning a Mrs Ferguson and British Gas.

Mrs Ferguson was unhappy with the service provided by British Gas and took her business elsewhere. This resulted in a multitude of letters from the supplier and threats to disconnect the supply. These were all complemented by further threats of court proceedings and referrals to credit rating agencies. Telephone calls explaining that no money was owed were all ignored, as were letters written explaining the position.

Quite understandably, Mrs Ferguson was most distressed by all of this and was reduced to a state of anxiety. She issued court proceedings, in which she claimed damages for the distress and upset she had been caused. British Gas appealed on the basis that this claim showed no reasonable cause of action.

The Court of Appeal was not impressed by this claim and was highly critical of British Gas and their conduct. They held that behaviour such as here was grave and quite capable of being harassment. It was oppressive and unacceptable and constituted harassment. The argument by British Gas that Mrs Ferguson need not have taken the demand letters seriously as they were computer-generated was rejected out of hand.

This case and Mrs Ferguson have opened the door for those being threatened by debt collectors or service providers such as British Gas to claim compensation through the courts where distress is caused by demands for payment of debts not owed. Usually the claim can be brought under the small claims procedure.

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