Debtors are being warned not to make payments to a debt collection firm, MWS Collections, which is under investigation by the Office of Fair Trading.

MWS Collections, a Glasgow-based firm, has contacted several people about debts that were previously collected by another Glasgow-based firm, Murray White, which went into liquidation in July this year. MWS Collections has told the debtors it is not happy with the amount of money they are paying under their debt management plans and has demanded bigger payments.

While it is legitimate for a creditor to ask for payments to be increased, MWS Collections does not have a consumer credit licence – a prerequisite for lending and collecting loans. It has also been calling clients after 10pm, contrary to Office of Fair Trading guidelines for debt collectors.

One person whose debt was originally lent by the Clydesdale Bank says she was called by MWS Collections last week during the day, and then in the evening, including after 10pm. The firm had already written to her to say that her existing payments were insufficient.

In a letter entitled "Do not ingnore (sic) this notice, legal action pending", MWS Collections said: "At present we understand you are dealing with Baines & Ernst and making payments … which has (sic) never been authorised by us. Unfortunately the current payments being made are insufficient and we do not deal with debt management companies … You have 7 days to reply to this letter and if no response has been received by you (sic) there will be a £100 administration charge added to the above outstanding amount and we will also be passing this over to our legal department for immediate court action to redeem the outstanding amount.

"Please also note that if legal action is taken you will also be liable for all charges incurred."

The debtor, who prefers to remain anonymous, says: "They want me to more than quadruple my payments. I can't afford that, but I'm worried I will get a CCJ if I don't comply."

Nick Pearson, a spokesman for Baines & Ernst, a debt management company whose clients have been contacted by MWS Collections, said: "Our major concern is that MWS Collections appear not to possess a valid consumer credit licence from the OFT. Even if they did we're greatly concerned about the methods they are employing. We think the manner and frequency of the calls to our customers could constitute harassment under Section 40 of the Administration of Justice Act 1970.

"We would urge anyone who has been contacted by MWS Collections to log the time, date and nature of the calls and report their concerns to the OFT as soon as possible. Until the issue of the credit licence has been resolved, we would urge consumers to save payments rather than pay them over."

Jim McDermott, a spokesman for MWS Collections, denied that the firm was making frequent or late calls to debtors, and said the firm had chosen not to deal with debt management companies, elected as third party intermediaries by the debtors, because its previous experience was that these companies were unresponsive. He also confirmed that the firm does not have a consumer credit licence, saying it did not need one because the debts were owned by and assigned to the firm.

But the OFT said: "A licence is needed just to be a creditor under regulated agreements – that is to be owed money. This includes collection as well as lending activities. Debt purchase companies have bought such debts and so become the creditor. The Consumer Credit Act as amended sets out that: 'consumer credit business' means any business being carried on by a person so far as it comprises or relates to a) the provision of credit by him, or b) otherwise his being a creditor under regulated consumer credit agreements."

The debts were previously being handled by another Glasgow-based firm called Murray White, which went into liquidation in July this year. According to the liquidator, David Hunter of accountants Campbell Dallas in Paisley, Murray White had bought a portfolio of non-performing loans from Clydesdale Bank, and was also collecting payments on non-performing loans still owned by the Clydesdale, but Hunter could find no records relating to these loans when he started the liquidation process.

Hunter says that the outstanding debts are still owned by Murray White and payments should not be made to any other party.

However, McDermott denied that MWS Collections has tried collecting money owed to the Clydesdale, and added that the debts MWS holds were transferred from Murray White "long before" the company went into liquidation.

Clydesdale Bank says: "We terminated our relationship with Murray White in January 2009 due to their conduct and the nature and volume of complaints we received. Since then we have found that some of our customers have continued to have issues with collection companies claiming to be acting on behalf of Murray White, where neither had any right to act for the bank. Where this has happened we have taken immediate legal action to ensure that this stops and we will continue do so."

Nigel Cates, deputy director of the OFT, said: "The OFT is aware of the Murray White and MWS situations and is investigating, although due to legal restrictions it cannot comment on details of any individual case."

Source: Guardian.co.uk