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Student Loans Company found using guerrilla debt collection tactics

Posted by Michael R in ,

In the aftermath of the recent Wonga scandal, in which the payday loan company was found to be using fictitious law firms as a mechanism for chasing up loan repayments, it has emerged that similar tactics have been in place at the Student Loans Company (SLC).

Allegedly since 2005, over 300,000 graduates falling behind on debt repayments were the recipients of threatening letters from "Smith Lawson & Company Recovery Services", in a tactic used by the SLC to recover late repayments in what the company described as a "cost-saving exercise" so as to avoid paying commissions to conventional debt collection agencies.

A response from the agency highlighted "The use of a secondary brand is part of SLC in-house recovery process, all letters issued in the initial stage of recovery are all branded Student Loans". The activities of the SLC, which resides as a quango under the responsibility of Liberal Democrat Business Secretary, Vince Cable, has caused anger and outrage due to the aggressive and misleading tactics.

The letters only mentioned that the Smith Lawson & Company entity was a trading name for the SLC in the small print, and it was subsequently confirmed that the Office of Fair Trading intervened in early 2014 with a request to change "potentially misleading" wording within its letters.

The news emerged shortly after Wonga, facing the possibility of a police investigation, was ordered to pay in the region of £2.6 million in compensation to over 10,000 customers in receipt of such letters. Commentators are calling for in excess of 300,000 graduates to be compensated due to the SLC activities - more developments will likely follow after Vince Cable meets with the agency to question these tactics. In the meantime, all activities of Smith Lawson & Company have been suspended.

Image courtesy of Flickr, Creative Commons