Regulatory Alerts2017-09-26
Collection of Non-Matured Claims
The Norwegian Financial Supervisory Authority mandates that debt collection agencies handling non-matured claims through invoice administration must secure these client funds with specific collateral or insurance. This requirement addresses the gap where such funds previously lacked the protection offered by the statutory security deposit required for matured debt collection. Alternatively, agencies may avoid this obligation by organizing collections so that debtors pay directly to the creditor's account rather than through the agency's client account.
FINANS TILSYNET Postboks 1187 Sentrum 0107 Oslo Circular Collection of Non-Matured Claims CIRCULAR: 8/2017 DATE: 26.09.2017 THE CIRCULAR APPLIES TO: Foreign debt collection companies
Collection of Non-Matured Claims 2 | Finanstilsynet Foreign debt collection activity involves collecting matured monetary claims for others. Several debt collection companies also conduct invoice administration, which means collecting non-matured claims. Funds from such additional activities are also client funds and must therefore be reconciled1. The responsibility associated with invoice administration activities, however, is not covered by the security deposit required under the Debt Collection Act. Funds related to this type of activity will therefore not have the same protection as client funds covered by the security deposit. A central consideration behind the Debt Collection Act is to ensure trust in the safe and prudent conduct of activities in companies granted concessions. Requirements for security deposits for entrusted funds are an important tool for reducing the risk that customers suffer losses. As noted, the statutory security deposit of debt collection companies does not apply to invoice administration. The Financial Supervisory Authority believes that the companies' customers do not necessarily perceive or understand this, but use the services of the debt collection company in the belief that the funds are secured. The Financial Supervisory Authority considers it unsafe and imprudent for debt collection companies conducting invoice administration to handle client funds that are not secured. To maintain trust in supervised companies, it is necessary that client funds received by the companies in connection with the additional activity are also secured with specific security deposits/insurance. Another solution is to organize the collection process so that the flow of funds does not go through the debt collection company's client account, but that the debtor pays directly to the account of the creditor. Anne Merethe Bellamy director for market supervision Anne-Kari Tuv section chief
1 See Finanstilsynet's circular 7/2013
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