Circular on Telephone Collection Activities

FINANS TILSYNET Postboks 1187 Sentrum 0107 Oslo Circular Telephone Collection Activities CIRCULAR: 5/2022 DATE: 15.12.2022 THE CIRCULAR APPLIES TO: Collection agencies

Telephone Collection Activities 2 | Finanstilsynet 1 Introduction This circular describes what Finanstilsynet (the Norwegian Financial Supervisory Authority) considers good collection practice in telephone follow-up of debtors as part of the recovery of overdue claims. The circular is prepared on the basis of a thematic supervision that Finanstilsynet conducted regarding the telephone collection activities of collection agencies. See the supervision report "Telephone Collection Activities," dated 15.12.2022, which illuminates Finanstilsynet's assessments.

2 General All collection activities must be conducted in accordance with good collection practice, meaning that the debtor must not be subjected to unreasonable pressure, damage, or inconvenience. This means, among other things, that the debtor must not be given incorrect or misleading information in telephone calls, that the debtor must not be contacted too frequently, and that the collection agency must respect privacy by avoiding telephone contact with the debtor at unfavorable times.

Collection agencies are subject to confidentiality obligations, cf. the Collection Act § 28. This means that the collection agency must have routines to ensure that the debtor's phone numbers are correct, and not, for example, belong to someone else at the debtor's workplace or in the debtor's family. The collection agency must not provide information about the debtor and the collection case via SMS if the agency is not certain that the message is received by the debtor themselves.

The duty of silence also prevents the collection agency from giving the client the opportunity to listen to the conversations between the collection agency and the debtor in real time, or giving them access to any recordings of telephone calls.

3 Time Debtors may only be contacted by telephone (calling and SMS) on weekdays between 08:00 and 21:00, and on Saturdays between 09:00 and 15:00. There is no opportunity to contact debtors on Sundays and other public holidays. If a debtor is contacted outside these times, it is considered a breach of good collection practice.

4 Frequency and time period (limits on the number of call attempts) A debtor must not be contacted by telephone so frequently that it is perceived as unreasonable pressure. It is the total pressure that must be assessed, meaning all contact and contact attempts from the collection agency to the debtor collectively. This includes mail, email, calling, SMS, etc. If the agency, for example, has routines for frequent sending of demand letters by mail and email, this may imply less pressure via telephone and SMS.

Regarding repeated calling attempts to consumer debtors¹, this – to avoid breach of good collection practice – should not occur more often than: • 1 time per day • 5 times per week • 15 times per month

This applies regardless of how many collection cases the debtor has for recovery with the individual collection agency. The agencies must have call lists to keep track of the number of calls at the debtor level, and not at the case level. If a telephone call is made based on a request from, or agreement with, the debtor, the calls are not counted towards the set limits.

Over what period the debtor can be contacted collectively must be based on what is appropriate and necessary to reach the debtor.

SMS is written contact with the debtor, and sending SMS is not considered telephone contact attempts that must lie within the aforementioned limits. There may be good reasons to send SMS related to the individual case – for example, to provide payment information, an overview of claims, or similar. There is no opportunity to send multiple identical SMS messages with general information to debtors with multiple claims.

If the debtor has informed the collection agency that they do not wish to receive telephone calls, the collection agency must, as far as possible, respect this.²

If the collection agency has reached the limit for the number of call attempts to a debtor in a given period, but a situation arises where it is necessary to make contact, the collection agency may still call the debtor. Examples of such cases are that the electricity company is to shut down the debtor's facility due to non-compliance,³ early maturity on a loan, or that the collection case is approaching the stage of legal recovery, and this will lead to further costs that can still be avoided. In assessing what is necessary in this context, the agency must specifically take into account how important it is for the debtor to receive rapid information about the situation.

5 Risk management and internal control Collection agencies are covered by the regulation on risk management and internal control. This means, among other things, that the collection agency must identify and assess the risks associated with telephone collection activities. Central risks may include: • Wrong recipient of call/SMS • Calling/sending SMS at an unacceptable time or too frequently • The debtor being given incorrect information in the call or SMS regarding the claim, or the legal consequences of not paying

¹ Debtors who have incurred obligations in their capacity as consumers. ² See, for example, the Financial Claims Board's decision 2020-860. ³ Energi Norge's standard agreement for grid fees and conditions for connection § 7-2

• The debtor being contacted by telephone when they have opted out of such calls

If the collection agency uses automatic dialing (use of dialers/robots), these systems must be configured so that the agency does not breach the limits on the number of call attempts and time. Automatic dialing must be arranged so that the collection agency always has the capacity to follow up when the debtor answers. The collection agency must continuously evaluate the number of outgoing calls in relation to the number of available case handlers.

The collection agency must also have a system to register reservations against telephone calls and ensure that debtors who have opted out are not added to lists for automatic or manual calling.

The agency must also evaluate other types of risks. Among other things, system risks may be relevant, that those conducting the calls have sufficient competence, etc. The various risks will be linked to the size of the agency, the number of case handlers, use of automatic or manual dialing, etc.

Risk assessments, internal control, and case handling routines must reflect the magnitude of these risks, and will therefore differ between agencies. The agency must be able to document the assessments.

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