Debt collection agencies: what they can and cannot do

A debt collection agency writes and phones on your behalf for a share of what it recovers. It has no legal powers you do not already have, so it suits some debts and is a poor fit for others.

Checked against official sources on 30 September 2026. Court fees from 13 July 2026; enforcement agent fees from 1 May 2026.

Key facts

Commission on commercial debts is typically 5–15% of sums recovered, rising to around 20–25% for older, smaller or consumer debts, often with set-up, administration or letter fees on top.
An agency is not a bailiff, has no powers beyond your own and cannot enforce anything without a court judgment.
Agencies collecting consumer credit debts must be FCA-authorised; an agency chasing an ordinary unpaid invoice or personal loan need not be, so absence from the FCA register is not by itself a warning sign.
Harassing a debtor is an offence under the Administration of Justice Act 1970 s.40, and a creditor who joins in with an agent's harassment can be liable too.
A fixed-fee solicitor's letter before action typically costs £20–£100 plus VAT for a template letter or £150–£550 plus VAT for a bespoke one.

What a debt collection agency is

Three different things are called debt collection. Some large creditors have in-house collections teams. Third-party agencies are separate businesses paid, usually by commission, to chase debts that remain yours. Debt purchasers buy debts outright for a fraction of their face value and then own them. This guide is about the second kind: an agency you instruct to recover money that is still owed to you.

What an agency actually does is send demand letters, telephone and email the debtor, and sometimes visit. Its leverage is persistence, an unfamiliar letterhead and the implication that court action will follow. For a debtor who is simply ignoring you, that can be enough. For a debtor who has no money, or who disputes the debt, it changes nothing.

When an agency can make sense

Many creditors find an agency worthwhile where several of these apply:

Business-to-business debts. Agencies routinely add Late Payment of Commercial Debts (Interest) Act 1998 interest and the fixed recovery sums of £40, £70 or £100 to the debtor's account, and some charge nothing to the creditor on that basis. The Act applies only where both supplier and purchaser act in the course of a business.
Several debtors. Agencies price for volume and quote lower commission for multiple instructions.
An undisputed debt and a solvent debtor who is ignoring you. The agency's tools, letters and calls, work best on someone who can pay and has not engaged.
You do not want to litigate. An agency handles the correspondence, though it cannot take the debt to court in its own name (see below).

Note that a claim of up to £10,000 can be issued online through Online Civil Money Claims (the gov.uk "Make a money claim" service) for a fee of £35 to £455, with free HMCTS mediation if it is defended. For a single undisputed debt the court route is often cheaper than commission. The Is it worth suing? guide and the fee and interest calculator help with the comparison.

What it costs

Commission is charged on money recovered. Published rates found on 30 September 2026 ranged from 6% upwards, with 10% a common headline figure for UK commercial debts and 15% for international or smaller debts. Guides from the sector put the typical range at 5–15% for commercial debts, rising to around 20–25% for older, smaller or consumer debts. Rates depend on the type, age, size and number of debts.

Charge	Typical range
Commission, commercial debt	5–15% of sums recovered
Commission, older or consumer debt	Up to around 20–25%
Set-up or administration fee (where charged)	£50–£150 each
Letter before action (where charged separately)	£100–£250
Minimum single debt accepted	Commonly £500 to £1,000 or more

Three points from the small print. First, "no collection, no commission" does not always mean no fees: some agencies charge set-up, administration or letter fees regardless. Second, on a consumer debt the commission cannot be added to what the consumer owes, so it comes out of your recovery. Third, whether commission is still payable if the debtor pays you directly after instruction is a matter for the agency's terms; read them before signing.

What an agency cannot do

No legal powers. Debt collectors are not bailiffs. They have no additional powers, cannot remove goods and cannot enter a home without permission. Only an enforcement agent (bailiff) acting under a court warrant or writ can take control of goods, and only after a judgment.
No enforcement without a judgment. Wages cannot be attached, accounts frozen or goods seized until a court has given judgment and you have applied to enforce it. FCA rules forbid regulated collectors from suggesting otherwise (CONC 7.11.8R).
Useless if the debt is disputed. A regulated collector must suspend recovery once a debt is disputed on valid grounds (CONC 7.14.1R), and Credit Services Association members must cease activity while investigating a dispute. A disputed debt comes straight back to you to prove in court.
The debt stays yours to prove. An agency does not change who must show at a hearing that the money is owed and how much.
Suing in the agency's name needs a written assignment. Under the Law of Property Act 1925 s.136 a debt passes to another person only by an absolute assignment in writing, signed by you, with written notice to the debtor. Without that, any claim is in your name.
Time is lost. A collection cycle adds weeks or months to the six-year limitation period that is already running. See Time limits.

A creditor is not insulated from what its agent does. The Administration of Justice Act 1970 s.40(2) makes a person guilty of harassment if they concert with others in harassing demands, and FCA rules make a regulated firm responsible for steps its agent takes. Choose an agency whose conduct you would be content to defend.

Regulation and the law on harassment

FCA authorisation is required only for the regulated activity of "debt collecting", which the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 art. 39F defines as taking steps to procure payment of a debt due under a credit agreement, a consumer hire agreement or a peer-to-peer agreement. Reading that definition, collecting an ordinary unpaid invoice, a loan between friends or a non-credit contract debt is not a regulated activity, so an agency doing only that will not, and need not, appear on the FCA register. Authorised firms are bound by the FCA's Consumer Credit sourcebook (CONC 7), which requires forbearance towards customers in arrears, bans contact at unreasonable times and bans misrepresenting the firm's authority or the legal position.

The Credit Services Association is the trade body. Its Code of Practice (May 2024) is mandatory for members: contact at reasonable times and intervals, no references to litigation unless genuinely intended, no aggressive, threatening or misleading wording, and collections paused while a valid dispute is investigated. Complaints go first to the member, then to the CSA or, for FCA-regulated members, the Financial Ombudsman Service.

Three pieces of general law apply to anyone chasing a debt, agency or creditor:

Protection from Harassment Act 1997. A course of conduct (at least two occasions) that the person knows or ought to know amounts to harassment is a criminal offence and gives the victim a civil claim for damages and an injunction.
Administration of Justice Act 1970 s.40. It is an offence, with the object of coercing payment of a contract debt, to harass someone with demands calculated by their frequency, manner or accompanying threats to cause alarm, distress or humiliation; to falsely represent that criminal proceedings lie for non-payment; to falsely claim official authority; or to use documents falsely purporting to be official. Reasonable steps to secure payment or to enforce by legal process are excluded.
Digital Markets, Competition and Consumers Act 2024 s.228. Where a trader deals with a consumer, an aggressive practice using harassment, coercion or undue influence, including threats of action that cannot legally be taken, is an unfair commercial practice and an offence. This replaced the Consumer Protection from Unfair Trading Regulations 2008 on 6 April 2025. It does not apply to an individual collecting a personal debt.

Scams and clone firms: how to check

Fraudsters imitate genuine collection firms, sometimes copying a real firm's name and FCA reference number. Before paying any fee or handing over a debtor's details, many creditors run three checks:

FCA Financial Services Register (register.fca.org.uk) if the debt arises under a credit or consumer hire agreement. The FCA also publishes clone-firm warnings. Remember that an agency collecting only non-regulated debts will legitimately be absent.
Companies House (free) for the company's status, registered office, filing history and officers. A firm that is dissolved, recently incorporated or has no accounts deserves caution.
CSA member directory (csa-uk.com), searchable by company name and trading style.

For a regulated debt the FCA's advice is to deal only with firms it has authorised and to check the register to make sure they are, since clones copy the genuine firm's name and reference number.

The alternatives

A solicitor's letter before action. Debt-recovery firms sell template letters for roughly £20–£100 plus VAT; a bespoke letter on a disputed matter from a solicitor costs roughly £150–£550 plus VAT. The letter carries the same lack of legal force as an agency's, but for a straightforward debt it is a one-off cost rather than a percentage. The Letter before claim guide explains what the letter must contain under the pre-action rules, and Be Small Claims Wise can draft one for you.

A statutory demand. A formal demand that, if unpaid after 21 days, allows a bankruptcy petition against an individual owed £5,000 or more, or a winding-up petition against a company owed more than £750. It is a route to insolvency, not to a money judgment, and it is an abuse of process to use it to pressure payment of a debt that is genuinely disputed: Craymanor Ltd v LS Power and Data Ltd [2021] EWHC 192 (Ch). An individual may apply within 18 days to set a demand aside where the debt is disputed on substantial grounds. Winding up also requires a £2,600 deposit and £352 court fee, so it is rarely proportionate to a small claim.

The county court claim itself. The small claims track is designed for people without lawyers. Fees are fixed and recoverable from the debtor if you win, mediation is free, and a judgment opens the door to enforcement. Start my claim walks through it, and ClaimsBot can compare the routes for your debt.

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Sources

Quick answers

How much does a debt collection agency charge?

Usually a commission on what it recovers: typically 5–15% for commercial debts and up to around 20–25% for older, smaller or consumer debts. Some agencies also charge set-up, administration or letter fees, and most set a minimum debt size of £500 to £1,000 or more.

Can a debt collection agency send bailiffs?

No. An agency has no powers beyond those of the creditor. Only an enforcement agent (bailiff) acting under a court warrant or writ, issued after a judgment, can take control of goods.

Does a debt collection agency need to be FCA-authorised?

Only if it collects debts due under credit agreements, consumer hire agreements or peer-to-peer loans. On a reading of article 39F of the Regulated Activities Order, collecting an ordinary invoice or personal loan is not a regulated activity, so such an agency need not be on the FCA register.

Can the agency sue the debtor in its own name?

Only if you have assigned the debt to it in writing under the Law of Property Act 1925 s.136 and the debtor has been given written notice. Otherwise the debt remains yours and any court claim must be in your name.

What if the debtor disputes the debt?

The agency will normally stop. Regulated collectors must suspend recovery once a debt is disputed on valid grounds, and CSA members must pause while investigating. A disputed debt has to be proved in court, and that burden stays with you.

Am I responsible if the agency harasses the debtor?

You can be. The Administration of Justice Act 1970 s.40(2) makes anyone who concerts with others in harassing demands guilty of the offence, and FCA rules make a regulated creditor responsible for steps its agent takes.

What is a cheaper alternative to an agency for a single debt?

A fixed-fee solicitor's letter before action (roughly £20–£100 plus VAT for a template, £150–£550 plus VAT bespoke) or the county court claim itself, where the issue fee for a claim up to £10,000 is £35 to £455 and is added to the judgment if you win.