New rules for the debt collection industry also relevant for servicers and credit providers

There will be new rules to improve the quality of debt collection services and prevent abuses. On January 1, 2024, the Debt Collection Service Quality Act (Wki) is expected to take effect. This law requires debt collection agencies to register in a special debt collection register. Several new requirements will also apply.

Scope

The new legislation applies to all private parties who perform (extrajudicial) debt collection activities. Companies that buy and then collect receivables are also covered by these rules.

The new rules do not apply to the collection of own receivables. Thus, if debt collection is outsourced to third parties, the rules do apply to the company performing the collection work.

What do the new rules entail?

There will be an obligation for companies to register in a debt collection register. Inclusion in the register will be possible if it can be made sufficiently plausible that the company can meet the requirements set and the directors are reliable. The register is managed by Dienst Justis (known for issuing the Certificate of Good Conduct). The Justice & Security Inspectorate will supervise these new rules.

The following obligations apply to debt collection services:

• Persons in charge of debt collection activities must be professionally competent;
• The composition of the claim is transparent and understandable;
• Requirements for generic communication;
• Requirements for proper administration;
• A complaint and dispute resolution process;
• Employees must be trustworthy and have integrity.
• Registration requirements and the consequences

Companies that fall within the scope will be required to register after the Debt Collection Services Quality Act comes into effect. Offering or providing debt collection services without registration thereafter will be an economic offence.

The Wki also includes civil-law consequences. The requirements of this law affect the claim in favor of the debtor. Collection fees are not due from an unregistered agency. Nor is the debtor obliged to pay if the collection agency is not registered. This creates an important incentive for both the debtor and the creditor to consult the register.

Coherence with the Wft

There is no exemption for servicers who already have a license to mediate credit. Registration in the debt collection register is also mandatory for them. Lower regulations will include that requirements from the Wft can coexist with those from the Wki. Servicers that perform collection activities in the context of credit management will soon have to comply with both the requirements of the Wft and the requirements of the Wki.

Entry into force and transitional regime

The law has already been passed by the first and second chambers, but has yet to enter into force. This was expected to take place in the summer of 2023. However, this has now been postponed to January 2024.

A transitional regime will apply to companies already performing debt collection activities. They will have one year to meet the requirements and obtain registration during that period.

What can you do now?

If you perform collection activities for customers, then the new rules will apply to you. The law has now been passed and the underlying rules are available in draft form. You can already review your generic communication and check whether your employees meet the set competence requirements.

If you outsource collection work, it is important to check in the future whether your outsourcing partner has the required registration. It is wise to also include the registration as a requirement in your cooperation agreement.

Want to know more?

Projective Group would be happy to help you comply with legal obligations. Do you need help in applying for registration in the debt collection register, or in complying with the new requirements? If so, please contact us without obligation.