How are debt collection services regulated?

(Baonghean) - Debt collection service business is one of the most sensitive business types in the financial and monetary market. Bankruptcies due to black credit, or simply complicated civil credit leading to criminal violations, have raised a need to bring debt collection services into the framework of the market.

The Ministry of Finance's assessment of the debt collection service business situation shows that, according to reports from 43 localities nationwide by the end of 2015, there were 3 localities with debt collection service businesses still operating. Ho Chi Minh City has issued security and order certificates to 34 debt collection service businesses.

During the operation, 18 establishments have stopped or temporarily stopped operating due to ineffective business, difficulties in human resources, land reclamation..., the remaining 16 establishments are operating including: 9 joint stock companies, 5 limited liability companies, 2 branches with a total number of employees of 239 people. Da Nang city has 4 enterprises with a total charter capital of 6.5 billion VND. An Giang province has 1 enterprise providing debt collection services that is still operating.

Provinces and cities: Hai Phong, Nghe An, Hai Duong, Tien Giang, Soc Trang, Khanh Hoa... used to have debt collection service businesses but now they are no longer operating, the number of debt collection service businesses is increasingly shrinking.

Illustration: Internet

In terms of business results, most businesses are not profitable. Debt collection services have gradually become more organized, businesses operate in accordance with the law, publicly and transparently collect debts, and have limited unqualified debt collection service businesses and "mafia" operations.

However, the business efficiency of enterprises is low because this is a special industry, still quite new to Vietnam, the management level and debt collection skills of debt collection service enterprises are low.

The main reason for the limitations is that debt collection service businesses have not yet complied with the regulations in Decree 104, mainly violating regulations on debt collection service business conditions and social security and order violations. The role of state management agencies is still unclear, only when incidents occur will the police force participate in handling them to stabilize social security and order. However, in Decree 104, the responsibility of the Ministry of Public Security has not been specified, and the police force does not have the authority to impose administrative sanctions in the field of debt collection service business.

Therefore, it is necessary to have clearer regulations to inspect and supervise debt collection service businesses, and at the same time, it is necessary to enhance the role of the people's police force in state management of this activity because only the police force has enough forces, means and expertise to put this activity into order.

Regarding capital conditions, previously, Decree 104 stipulated that the capital condition for debt collection service businesses was at least 2 billion VND, to ensure that debt collection service businesses must have minimum facilities when conducting business activities. However, the 2014 Enterprise Law no longer has regulations on legal capital, so for most industries, capital is no longer a business condition (except for some special industries such as banking, securities, etc.).

Regarding the conditions on standards for managers and employees of debt collection service enterprises: Decree 104 stipulates that managers and employees of debt collection service enterprises must ensure judicial conditions (having full civil capacity, no criminal record) and conditions on professional capacity (having a university or intermediate level of education or higher in one of the following fields: economics, management, law, security). Through the implementation of Decree 104, it can be seen that, similar to the business activities of enterprises in other industries, the professional capacity of managers and employees of debt collection service enterprises only affects the performance of the enterprise itself, without much impact on the operations of other enterprises as well as the economy, so it is not necessary to stipulate conditions on professional capacity of managers and employees in debt collection service enterprises.

It can be seen that in order to put the debt collection service business into operation well, it is necessary to carefully consider the legal regulations for this type. At the same time, when put into practice, there must be preparation for coordinated action, in order to manage the debt market in general and debt collection services in particular.

Red River