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Debt collection and external dispute resolution COSLs updated rule 2014

Thursday, May 08, 2014 - Posted by Philip Harvey

The Credit Ombudsmen Service Limited ("COSL") has released updated rules in force from 5 May 2014 (9th Edition). Compulsory external dispute resolution has had a big impact in debt collection since its introduction.

It is important to understand how COSL can impact on the debt collection process. Should a complaint be received by COSL, COSL will refer the matter your internal dispute resolution process. If the complaint is not closed at this stage it is escalated into COSL's external dispute resolution process.

During this process, debt collection action cannot be undertaken until the complaint has been dealt with and any relevant time period has expired.

Enforcement Action in the debt collection cycle and EDR

Section 17 of the COSL rules deal with what enforcement action you can take in your debt recovery process once a complaint has been raised.

17.1 states enforcement action cannot be initiated, or continued, or enforced whilst a complaint is being dealt with. The debt cannot be sold and cannot be listed.

17.2 provides some exceptions to 17.1, such as if the limitation periods for proceedings will shortly expire, exercise rights to freeze or preserve an asset, or resume legal proceedings should the complainant take steps beyond lodging a defence or a counterclaim.

17.3 at COSL's discretion, debt collection enforcement action may be continued if the complaint is not relevant to the enforcement action and the complaint can be dealt with separately or subsequently from the enforcement action or if another mortgagee will proceed to sell the secured property.

17.4 COSL will not ask you to withdraw an instruction already issued to a sheriff to enforce judgment or to suspend the sale of the security where a contract to a 3rd party has already been entered into.

17.5 essentially states you cannot do anything in the debt collection process that goes against a decision made by COSL or an agreement between parties.

17.6 advises when you may initiate or resume enforcement action in your debt collection process.

Complaints not covered by COSL's scheme

Of particular relevance to the debt collection cycle is point 10.1 (m). COSL does not have jurisdiction where the complaint has been dealt with by a court amongst other parties, unless the complainant requested a stay on the execution of the default judgment and this was declined and the court was not asked to consider the request OR both parties consent in writing to the complaint being heard by COSL.


You can read the COSL rules in full here


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