It recently emerged that the Student Loans Company have been sending misleading Wonga-style letters to students since 2005 and is now being put under pressure to compensate over 300,000 graduates as a result. The call to compensate the affected graduates came after payday lender Wonga was required to do the same to those affected by their controversial debt collection practices.
The difference, however, between the Student Loans Company and Britain’s high street banks, who have also been found to send similar letters, and Wonga’s practices, is that the small print explains that the letters are from subsidiaries of the companies they are sent from. For example, the letters sent from the banks were sent from in-house lawyers practising within the correct rules and regulations. Nevertheless, following the recent controversy surrounding Wonga, many of the banks have altered their practices in relation to debt-collection in order to prevent misleading their clients.
The Financial Conduct Authority (FCA) and the Solicitors Regulation Authority (SRA) will now be reviewing these practices. The FCA as a starting point has asked customers to send in copies of debt recovery letters from banks and utility companies, among others, whilst the SRA are aiming at producing guidance for those solicitors employed in-house by these companies. SRA executive director Richard Collins, was recently quoted as saying: "We will shortly be issuing guidance for in-house solicitors on our existing requirement that publicity must not be misleading. This will make it clear that they cannot use forms of words that give the impression that they are an independent law firm and not employed solicitors." This will be a welcome step for both customers and in-house solicitors alike. Whether any action will be taken against the banks or any other companies, remains to be seen.
By Geoffrey May, a paralegal in the regulatory department
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