Debt collection firms shut down for keeping cash

Businesses paid the debt collection agencies hundreds of pounds but never received their owed money

Three debt-collection agencies have been shut down after spending thousands of pounds of their clients' money at bookmakers, hotels and football clubs.

Sunderland-based EDC Group NE Ltd, UK EDC Ltd and UK TCF Limited charged clients to collect debts on their behalf but failed to pass on almost £55,000 of their clients' money.

The companies, which were all owned by the same director, have been dissolved by the High Court following an investigation by the Insolvency Service (IS).

One victim, who the IS did not name, said EDC Group NE Ltd had given her "false hope" after she paid £600 to recover £15,000 in debts.

She said the firm gained her trust after it claimed to have quickly found the debtors' addresses and new business locations.

"I see now that this was all a confidence trick to gain my trust and impress me so that I would willingly part with my money," she said.

Bookmakers and hotels

The IS said the three companies had falsely claimed to have been collecting unpaid debts for more than 25 years, however, the companies were only incorporated in 2022 and 2023.

One business owner, who reported the debt-collection firms to Action Fraud, said the agencies had taken payments of between £30,000 and £50,000 from his clients.

Analysis of EDC Group NE Ltd's bank account, carried out by the IS, found £17,000 was paid to bookmakers, £9,679 to football clubs and £21,362 to hostelries, hotels, restaurants and supermarkets.

It found no payments to clients for debts collected.

The IS's chief investigator, David Hope, said the companies were "nothing more than operations designed to take money from clients".

"The victims trusted these companies to collect debts on their behalf but instead found themselves unable to contact anyone after paying upfront fees, while money that was collected was kept by the companies," he said.

The Insolvency Service said the three companies failed to provide financial records and the company director did not co-operate during the investigation.

Each of the companies were wound up at the High Court in Manchester and the Official Receiver has been appointed as their liquidator.

As part of the liquidation process a report into the conduct of the business will be carried out.

The conduct report will determine whether further investigation into the actions of the company's director is carried out by the Insolvency Service or the police.