New regulations being considered by the Financial Conduct Authority (FCA) will drive up collection costs and hurt collection rates, according to a new study by FICO and Market Force.

In the survey, 67% of respondents agreed that new FCA regulations would add significant costs to the debt collection process.

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Nearly as many (64%) said that the increasing burden of regulation will negatively affect collection rates. FICO and Market Force surveyed more than 180 UK executives with responsibility for debt collection and recovery.

Bankers, who are used to a high degree of regulatory compliance, are the least worried of respondents, with just 51% concerned about the impact of new FCA regulation on collection rates. By contrast, 75% of respondents from debt collection agencies are worried about rising costs, and 79% are concerned about impaired collection rates.

Nick Walsh, director of Global Business Consulting for collections at FICO, said: "Collection agencies and departments in the UK are trapped between a harsh economy and a tighter regulatory environment. Unfortunately, it appears that uncertainty over FCA regulation is causing many collectors to stall investments in technologies that would help them spot problems earlier and work more productively with debtors."

The FCA will take over regulation of consumer credit from the Office of Fair Trading in April 2014. The new regime is expected to be more rigorous, with debt collection and administration falling into the FCA’s higher-risk lending category.

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Juliet Knight, director of Marketforce, said: "Given that compliance is non-negotiable, debt collection agencies should seriously consider investing to upgrade their processes and systems to handle the new regulatory regime without compromising operational performance. The flexibility afforded by more advanced collections systems will serve both compliance needs and the bottom line."