A financial regulator is trying to stop debt collectors passing on so-called ‘kickback fees’ to their clients by bringing a tribunal case.

The Financial Supervision Office (BFT) has raised the disciplinary action against two debt collectors who passed on a share of the administrative costs incurred by deducting debts directly from wages.

The BFT says the practice creates a perverse incentive for creditors to press for debts to be reclaimed from wages, regardless of the debtor’s circumstances, and creates extra administrative costs.

Debt collectors are allowed to charge up to €122 for recovering debts from earnings. Some pass on a portion of these costs on to the creditor in the form of a ‘kickback fee’, allowing them to make a profit on the debt.

The BFT said the two cases were the first in a series designed to stamp out the practice. But the professional debt collectors’ organisation KBG said the regulator needed to change the rules to make kickback fees illegal.

‘We have spent two years trying to change these practices,’ chairman Wilbert van de Donk told NOS Radio 1 Journaal. ‘They are the result of having a competitive marketplace. Until the regulations are in place, we think it’s hard to ask for a judicial decision.’