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I am a little curious as to why this practice has caused such an uproar.
Companies have obviously found that the recovery rate with letters from 'outside' solicitors is better than simply another chasing letter from the originating company. There are good reasons for this- people respond to 'credible threats' and one of the ways to make a threat credible is to show willingness to spend resources to back that threat up. In this case, firms want to display their determination to receover the debt by showing willingness to pay 'outside' law firms to send the recovery letters. Rightly or wrongly, customers will interpret a company's willingness to spend money going after the debt as a credible sign that they should pay up.
None of this bothers me- credible threats are recognised as useful in many walks of life, from nuclear arms races (showing a willingness to spend billions, even if nobody every wants to launch a missile) to agressive tattoos (sending a message of "don't mess with me, I'm willing to undergo a painful scarring procedure to show my hardness").
But as far as I'm concerned I don't mind companies trying to show a credible threat without actually paying for it.
It seems the only two classes of people who are bothered by this practice are either (1) delinquent debtors who may have felt pressured to pay back their outstanding money out of fear of legal action (they should have been paying back the money anyway) and (2) solicitors who don't like losing their exlusivity in writing threatening legal letters.
The complaint seems to be, if you're going to threaten legal action, at least spend the money to hire real lawyers to do the threatening.
That's a bit like police officers complaining that private security guards should not be allowed to dress in uniforms that give them a similar look of authority to real police, lest the decreasing rate of shoplifting lowers the demand for "policing services."
When will solicitors learn that the only real long-lasting value in their profession lies with giving good advice, and not in retaining artificial exlusivitity to certain activities. It takes a lot of years of learning and experience to give great advice, and that can't be taken away. We should not be afraid of losing work peripheral to that core advice- it is not our unique selling point.
AM