Debt Collection Brexit
Brexit and the impact on debt collection
I’ve just returned from the annual FENCA debt collection conference, this year held in Lisbon, and, as you can imagine, Brexit was a hot topic.
Three years and four months on from the Brexit referendum, and there is still no agreement on how or even whether the UK will leave the European Union, although as we approach the October 31 deadline, there has been frenzied activity in Westminster and Brussels as the government attempts to put together a deal that will gain Parliamentary and European support. Meanwhile, in the debt recovery sector, as in every other part of the economy, we are still waiting for a resolution.
My own feeling is that it is enormously beneficial for the UK and other states to work with a common set of laws that support the principle of free movement. History, going back to the time of the Ancient Greeks, tells us that protectionism has never been successful economically, and, going forward, the big challenges we face as a planet will only be solvable with international co-operation.
But though I am a Remainer, I am not British, and so had no vote. I recognise that those who voted Leave believed that there were solid economic reasons for doing so, and that there are wider issues at play here, including sovereignty and what it means to be a nation in the 21st century. And the vote was clear. A majority of those voting in the Referendum voted to leave. There was no third option and a failure to respect the verdict of the public could have serious repercussions.
Back in 2018, the Financial Conduct Authority produced an advice paper titled “Preparing your firm for Brexit,” and this is a good place to start if your debt collection agency or financial firm has not yet begun to fully consider the implications of Brexit. That applies whether you have customers or corporate partners in the European Economic Area (EEA), receive funding from an EEA entity or are involved in the transfer of personal information or outsourcing services between the UK and the EEA.
The credit and collections sector is covered by a range of EU legislation including the General Data Protection Regulation (GDPR). The good news is that the UK Data Protection Act 2018 was designed to mirror GDPR, so there should be minimal disruption to the flow of personal data post-Brexit, as any agency that works cross-border will already have put into place GDPR-compliant processes.
In addition, FENCA is developing a GDPR Code of Conduct for the debt collection industry and the aim is to create a framework for data transfer for all EU and non-EU agencies to sign up to.
Another area of potential concern is the EU’s proposed Directive on Credit Servicers, Purchasers and the Recovery of Collateral. The Treasury and the FCA are still working on the potential impact on the UK debt collection sector to ensure that the proposed measures don’t adversely affect either debt collection companies or UK customer protections.
Finally, employment is another element to consider. Companies that currently employ EU residents or those with provisional or uncertain status may be affected post-Brexit and it is yet to be seen what changes could be made to UK employment law. Many EU employees are currently being advised to apply for permanent residency in the UK as part of the EU Settlement Scheme, which could prevent future problems if they have to exit and then re-enter the UK.
Even at this late date, there is a huge element of uncertainty associated with Brexit, and uncertainty is never welcome in any business. My advice to everyone operating in the UK debt collection sector is to take what steps you can to prepare for every eventuality and follow all of the latest advice from the UK government, trade bodies and organisations to minimise disruption to your business.
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