Credit Management
It Is Time To Enact A Debt Collection Act
By Wasilwa Miriongi
In the credit circles the trending issue that has been captured in the headline is “ Banks fight bid to limit right to sell loan property ” that appeared in the Business Daily , it is a petition currently in our courts . What has been interesting is how the advocates have presented their arguments either in support of the petition or against the petition .
The question that has always bothered me is what about debt collectors hired by these consumer lending organizations ? That for decades , the debt collection industry in Kenya has operated with minimal regulation , leading to concerns about predatory practices and vulnerable debtors being harassed .
There is need for a turning point to be arrived at , and this may only be achieved by passing of the Debt Collection Act ( DCA ). Remember before the passing of the Data Protection Act , how consumer information was carelessly shared and how innocent persons were harassed in the name of debt collection . So far there is no such proposal in parliament or in our courts . It will no doubt be a landmark legislation , should it be put in place . The aim of such an Act would be to transform the landscape of debt collection , protecting individuals and businesses while fostering a more professional and ethical industry .
There are a number of countries that have adopted the act , the recent one being Singapore so it will not be unique to the Kenyan situation . Taking a few highlights from the Singapore act which has the potential impact on various stakeholders , I wish to share the opportunities and challenges it presents .
The act in Singapore case has a comprehensive licensing regime . This requirement ensures minimum standards of competency and professionalism within the industry . Individuals acting as debt collectors will also need to be licensed , further solidifying a culture of accountability .
It also stipulates strict conduct guidelines for debt collection activities . It prohibits harassment , threats , and misleading
Building a sustainable future requires enactment of debt collection agencies ’ act which will mark a new chapter for debt collection . While there could be challenges to be overcome , the Act if enacted will provide a solid foundation for creating a more fair , ethical , and consumer-centric industry .
practices , promoting respectful and ethical interactions between debtors and collectors . Notwithstanding the fact that it empowers individuals to lodge complaints against errant companies and collectors , leading to investigations and potential penalties .
On protecting debtors the act prioritizes the protection of debtors , particularly vulnerable individuals facing financial hardship . It grants debtors the right to choose with whom they wish to communicate regarding their debts and allows them to request certain communication methods be avoided . Additionally , the Act prohibits debt collection from occurring at debtor ’ s workplaces or during unreasonable hours , safeguarding their privacy and preventing undue pressure .
Impact and Challenges of such a transformative journey should the act be implemented
The arrival of the act will signify a significant step towards a more responsible and ethical debt collection industry . It may come along with potential benefits that are multifold in nature such as :
• The act will bring about enhanced consumer protection as debtors gain greater security and peace of mind , knowing their rights are safeguarded against aggressive or unfair practices .
• The Improved industry standards that accompany licensing and conduct requirements raise the bar for professionalism and competency within the sector .
• It will seek to reduce societal costs ,
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