Introduction – what is a prove it letter?
In its simplest form, a prove it letter is one you may have to send if you receive communications (usually from a debt collection agency) asking you to pay a debt which you feel you do not owe. They may simply have the wrong person, or it might be a debt that you think has already been cleared. Some of the more questionable debt collection agencies may just contact people with a similar name in the hope that people just pay the debts (this is how scammers make their money too). The onus is on the debt collection agency to show that you owe the money, rather than on you showing that you don’t so you are perfectly entitled to query it.
What do I need to put in a prove it letter?
The prove it letter needs to contain certain information, as well as quoting information from the FCA (Financial Conduct Authority). Whilst this might sound really scary or overwhelming, National Debtline, which is a UK debt charity run by The Money Advice Trust, have a sample letter template which you can use. As they are a UK charity, they will not charge for providing help, advice or information. It is important to remember that, as there are some organisation who give the impression that they are debt charities or organisations for your help, but ultimately they charge for their services and may well just be trying to sell you something which you don’t want or need.
Other well known and recommended UK debt charities include CAP (Christians Against Poverty – who helped me on my debt journey) and Step Change.
Relevant information from the FCA for prove it letters
This information is available in the template provided by National debtline, however it is useful to understand what you are saying when you contact the debt collection agencies. The FCA Consumer Credit sourcebook states the following:
- “A firm must not ignore or disregard a customer’s claim that a debt has been settled or is disputed and must not continue to make demands for payment without providing clear justification and/or evidence as to why the customer’s claim is not valid.” 7.5.3″
- A firm must suspend any steps it takes or its agent takes in the recovery of a debt from a customer where the customer disputes the debt on valid grounds or what may be valid grounds.” 7.14.1
- “Where a customer disputes a debt on valid grounds or what may be valid grounds, the firm must investigate the dispute and provide details of the debt to the customer in a timely manner.” 7.14.3
In short this is telling you that they cannot ignore your complaint and they cannot continue to pursue the debts until they have proved that your claim is not legitimate and the debt still stands. They must also investigate in a timely manner, meaning they cannot leave it hanging over your indefinitely.
Taking the issue further
If you do not hear back from the first letter, it may well be that the agency was just sending letters in the hope of getting money out of you. If however you have checked your credit report via a service like Equifax, Experian or Clearscore, and there is a debt showing incorrectly, then you do need to follow it up. You should also let the Credit References Agencies know that you have disputed the debt.
Should the matter not be resolved at this stage, you may need to refer the matter to the Financial Ombudsman Service. If at any point you are confused or finding the process difficult or overwhelming, do not bury your head in the sand, contact National Debtline and speak to an advisor.