Here’s How SWG PL – E&O Can Protect Collection Agencies

May 2020

Here’s How SWG PL – E&O Can Protect Collection Agencies


Collection agencies are establishments that exist for the sole purpose of collecting overdue payments for claims and remitting these payments to their clients. The agency essentially takes over the responsibility of contacting the debtor to make, or enforce, payment arrangements.


According to the Government of Canada’s, there were 369 collection agency establishments in the country in 2019, with an average annual revenue of $501.60 thousand. (1) This market includes agencies debt collection services and tax collection services on a contract or fee basis.


To collect debt payments, a typical collection agency will engage in the following tasks:

● Send letters in the mail reminding that the debtor their debt has gone into collections and the outstanding amount

● Call the debtor to inform them of the outstanding debt and request payment, reminding the debtor of the consequences of not paying

● Offer to make payment arrangements for the outstanding debt

● Attempt to enforce payment arrangements for the outstanding balance (2)


Government policies are changing all the time, and collectors might not realise they are breaking the law. In an industry that relies on pressuring unwilling debtors, collectors can get into legal hot water over unlawful tactics. For example, making false claims or unjustified threats, or violating the debtor’s rights to privacy. (2) This is why every collection agency should have a solid Errors & Omissions policy. South Western Group’s Professional Liability E&O insurance can protect agencies from lawsuits resulting from honest mistakes in their collection activity.


Rules and Regulations for Debt Collection Agencies


Debt collection is provincially regulated, and rules and regulations vary by province. That being said, debt collectors are required to adhere to a set of Canada-wide guidelines. They include the following:

● They must obtain a license from the Office of Consumer Affairs in every province they operate in.

● They must make a reasonable attempt to notify a debtor, in writing, that a creditor has turned their account over to a collection agency.

● They may contact friends, family, neighbours or employers, but only to request a debtor’s telephone number and current mailing address. In addition, they may not disclose personal or financial information to third parties nor suggest those individuals pay the outstanding debt if they have not cosigned for them.

● They may not apply excessive or unreasonable pressure to repay the debt, and must identify themselves as collectors at the onset of any communications.

● They may not recommend legal or court action without informing the debtor first. (2)


A debtor may report the agency to their province’s consumer affairs office, or the Financial Consumer Agency of Canada, if they feel the collection agency has violated any of these rights or acted outside of their professional boundaries.


The SWG Difference


SWG PL – Miscellaneous Professional Liability insurance offers a packaged E&O and CGL policy that covers collection agencies and a wide range of classes of business. Tailored E&O coverage protects small to large firms from a broad range of miscellaneous risks. SWG provides a Miscellaneous PL policy at competitive rates, bringing extensive knowledge and underwriting experience in professional liability.


Our Miscellaneous PL covers more than just collection agencies. We also write for markets in the list below. Contact us if you don’t see what you are looking for.

● Bookkeepers

● Business Consultants

● Collection Agencies

● Travel Agents

● Employment Agencies

● Event Planners

● Interior Designers

● Leasing Agents

● Management Consultants

● Translators

● Utility Locators

● And many more


Visit our website for more details


Content is current as of the date of broadcast and is subject to change without notice.