Proposed new debt collection law - What could the new law mean for the future of debt collection companies?

A working group consisting of representatives from the Consumer Council, Finance Norway, Virke Inkasso and the Financial Supervisory Authority of Norway was set up by the Ministry of Justice and Public Security in the autumn of 2018 to look at specific issues relating to the Debt Collection Act.

The Debt Collection Act regulates the extrajudicial collection of overdue debts. The Act is intended to safeguard both the interests of efficient debt collection and the interests of the debtor. The way debt collection is conducted today is different from the way it was when the Debt Collection Act was enacted in 1988, partly due to a large increase in the number of cases and due to increasing automation and digitalisation among debt collection companies.

 The working group has reviewed large parts of the debt collection regulations and presented its proposal for a new debt collection act and new debt collection regulations on 27 January this year.

Among other things, the working group proposes a reduction of almost 50 per cent of the debt collection industry's fee income. A new fee model is proposed in which fees can be charged for various debt collection measures, instead of the current maximum rates (so-called light and heavy fees). The proposal reduces the fees for people who settle their case early in the debt collection process. In addition, people with small claims can enjoy lower fees.

In addition, increased competency requirements for the industry and rules that will benefit debtors are proposed. These include rules on increased communication and new rules for special debtor groups such as minors, adults with guardians and people with major payment difficulties.

The proposal could lead to cutbacks, job losses and bankruptcies at the traditional debt collection companies, but will also mean that more companies will have to adapt to the new rules.

The proposal will be sent out for consultation, and the industry will have to wait a little longer to see what the final result will be.

See the working group's report