Category Archives: Credit Control & Debt Collection News

How GDPR will impact on call recording

One of the most important updates to data protection regulation is coming into force in the next few weeks.

On 25th May 2018, the EU General Data Protection Regulation (GDPR) replaces the Data Protection Directive 95/46/EC. It’s designed to harmonize data privacy laws across Europe, to protect and empower all EU citizens data privacy and to reshape the way organizations across the region approach data privacy.

The new regulations will especially impact on businesses that record phone calls. Many debt collection agencies in both UK and Ireland record all inbound calls as matter of practice. Most of these businesses currently don’t have strict processes in place to manage consent, nor do they have adequate processes for dealing with requests from callers to have recordings deleted.

Much has been written about exactly how GDPR will impact on businesses that record phone calls. The fact is, businesses throughout the EU that record phone calls need to quickly start addressing how they intend to comply with the new GDPR regulations. If they don’t, they’re leaving themselves exposed to potential fines of up to 4% of annual global turnover or €20 Million (whichever is greater).

Debt Collection Ireland Regulation

There have been renewed calls recently by the Free Legal Advice Centre (FLAC) and the Irish Institute of Credit Management (IICM) for debt collectors and debt collection agencies in Ireland to be licensed.

According to FLAC and IICM, there have been reports that some debt collectors in Ireland have used intimidatory and unscrupulous practices in the pursuit of debtors and, in their view, regulation would help get rid of the “cowboy” debt collectors and help establish an Irish debt collection code of conduct to deal with issues such as how often and what times in the day/evening collectors should call or visit debtors.

While we fully agree with the need to regulate and license the debt collection industry in Ireland, we would also argue that creditors and/or their agents should be allowed to exercise legitimate means to pursue unpaid monies from debtors. We therefore need to look closely at whether the Irish judicial system is currently up to the task. It seems obvious that if the legal system was less costly and more streamlined, particularly in the case of uncontested debt collection matters, creditors would be less likely to look to the so-called “cowboy” debt collectors to recover their debts.

Let’s not forget that, in many of the cases which are passed on to debt collectors, a creditor would have probably tried (and failed) many times to recover the debt using amicable means. Handing over the debt to a debt collection agency is very often a last resort. And, because a debtor possibly ignored peaceful efforts in the past to collect the debt, a creditor may be quite happy for a collection agency to employ more heavy-handed tactics. Any small business or individual that has been in the position where it has been owed money will fully understand the creditor’s position.

Yes we agree there ought to be regulation of debt collection services in Ireland, but let’s not forget that small and medium sized businesses are failing every day because of cashflow problems caused by debtors’ failure to pay legitimate bills. In Irish debt collection cases, as with most things in life, there are two sides to every story. It’s just a shame that, with organisations clamouring to uphold the rights of debtors, the rights and livelihoods of creditors are far too often being ignored.

Small Claims Court Ireland – Online Claim

We previously wrote about the failings of the Small Claims procedure when it comes to business to business debts. However, for individuals who have an eligible claim for under €2,000, there is a new online facility for making a Small Claims application online.

Small Claims Court Ireland Online

Before you rush off to sue every Tom, Dick and Harry, take note that only the following types of claim are eligible:

  • A claim in respect of goods or services bought for private use from someone selling them in the course of a business (consumer claim).
  • A claim in respect of minor damage to property (but excluding personal injuries).
  • A claim in respect of the non-return of a rent deposit in relation to a holiday premises (actions relating to rent deposits for places of residence must be brought to the Private Residential Tenancies Board.)

Get more information and advice about the Small Claims Court procedure in Ireland by downloading the following PDF guide:

A Guide to the Small Claims Court in Ireland

Using the Small Claims Court In Ireland to Collect Business Debts

With great fanfare, the Minister for Justice, Equality and Law Reform, Mr. Dermot Ahern, T.D., recently announced new Court Rules to extend the current remit of the Irish Small Claims procedure to include certain business claims.

Introducing the new Small Claims procedure Minister Ahern said

“The new rules will facilitate claims from a business against another business in respect of goods or services not exceeding €2,000. This Government is conscious that all businesses, but small businesses in particular, have been significantly affected by the very difficult economic situation that this country is facing. Businesses, as well as consumers, can find themselves in a position where they have a legitimate claim against another business or vendor in relation to a contract in respect of goods or services purchased.”

Sounds like a great idea doesn’t it? On first reading, it appears the Minister has introduced something useful for once which will enable Irish businesses to issue legal proceedings themselves in the Small Claims Court (provided the debt is less than €2,000), thus doing away with the need for costly legal proceedings and solicitors. However, on further inspection, there are certain caveats which which suggest this won’t be a panacea to the problem of slow payers and bad debts.

The new Small Claims procedure amends District Court Rules (Order 53A of the District Court Rules 1997). The consumer or business must have purchased goods or services from someone selling them in the course of business. Claims cannot be made in respect of debts, personal injuries or breach of leasing or hire purchase agreements. The procedure provides an alternative and complimentary mechanism to the civil bill procedure.

So, it seems the Small Claims procedure in Ireland can’t be used for business to business debts. The most frustrating thing is that this was a perfect opportunity to introduce legislation which would have allowed businesses in Ireland (partricularly SMEs) a cheaper, fasttrack way of suing debtors. But if, as it seems, this isn’t the case, you kind of wonder what useful purpose it’s going to serve.

“Late payments strangling small firms” – Small Firms Association

“Late payment causes major problems for firms, imposing unnecessary administrative burdens and in some instances can lead to insolvency. 60% of businesses indicate that late payment impacts on their cash flow, resulting in companies having to resort to other forms of finance to facilitate cash flow requirements.” Avine McNally, Assistant Director, SFA.

The Assistant Director of the Small Firms Association (SFA), Avine McNally has said that late payments are compounding an already difficult financial environment for many small firms. The SFA Autumn Credit Conditions Survey highlights the challenges that are being experienced by small businesses in relation to late payments. McNally said “in Ireland, from the time a firm issue an invoice to the date it is settled is on average 66 days. Late payment causes major problems for firms, imposing unnecessary administrative burdens and in this current climate when cash is the lifeblood of small firms, late payments can result in insolvency.”

60% of businesses indicate that late payment impacts on their cash flow, with 48% of companies in the last three months having experienced an extension of credit terms taken by clients.
“The result is that the cost of doing business will increase, as many companies will have to resort to other forms of finance, such as overdrafts, to facilitate their cash flow requirements,” commented McNally.

Despite the introduction in 2002, of the EU Directive on Late Payment in Commercial Transactions Regulations, which allows companies to automatically charge interest penalties on accounts outstanding beyond 30 days, following the date of receipt of invoice, or of goods or services, the average payment period in Ireland is still extremely high and is one of the slowest payment durations in Europe.

McNally stated, “While the Late Payment Regulations allows for an interest penalty to be applied to overdue payments, only 16% of respondents to our survey have late payment charges in their terms and conditions. This indicates that most firms avoid applying an interest penalty for fear that it could jeopardise long standing business relationships or result in clients moving their business. What is required is the urgent establishment of a Small Claims Court for business to business transactions, to make it feasible for small companies themselves to pursue outstanding debts, without going through lengthy and costly civil court proceedings.”

KEY SURVEY RESULTS:
• 60% of small firms offer credit terms of 30 days or less
• 60% of companies experience late payments
• 13% of companies have shortened their credit terms in the current climate
• 48% of firms are coping with client companies taking extended payment time in the last 3 months
• 17% of firms have extended credit terms they take from suppliers in the last 3 months
• 16% of firms use debt collection agencies to follow up on overdue accounts
• 16% of firms have late payment charges in their terms and conditions

McNally commented “Late payment appears to be a self-perpetuating problem. When a firm receives late payment, the companies merely shift the problem on to their own suppliers. One of the key difficulties is enforcement of rights under the Late Payment in Commercial Transactions Regulations, 2002. If a company wishes to purse a claim, it is difficult to do so as there is no Small Claims Court for businesses and there are no simplified legal procedures.
Irish companies have problems gaining access to Court due to administrative backlogs, the lengthy delays in setting up Court dates and the relevant costs.”

“Unfortunately overdue accounts are a fact of life for every small business in Ireland, but the inadequate response by firms to late payment is itself a cause for concern, and one that needs to be addressed. If they are allowed, people will use a firm as their cheapest source of interest free credit, therefore, firms need to have a proactive credit management policy, which establishes credit worthiness, sets credit limits and tracks the type, amount and due date of invoices. It is essential that companies adhere to the policy and monitor and review it on a regular basis,” concluded McNally.