The Solicitors Regulation Authority has warned in-house solicitors about 'taking unfair advantage' of people's lack of legal knowledge when pursuing debts.
The regulator published a notice following a spate of revelations that companies have tried to recover money using letters headed with the names of fake or in-house firms.
The SRA said 'a number of complaints' have been received from members of the public about 'misleading information' in letters and letterheads, with materials used giving the impression they are from an independent firm of solicitors.
The notice reiterates the key parts of chapter eight of the code of conduct, which deal with publicity. The code says all solicitors must act with integrity and maintain the trust the public places in them and in the provision of legal services.
Richard Collins, SRA executive director, said: 'We have reviewed a number of complaints and a range of letters sent by solicitors employed within financial and similar institutions to pursue debts.??
'We believe attempts are being made to mislead third parties - invariably individual debtors - that their case has been referred to an independent law firm to pursue the debt, when in fact it is the in-house legal team. We believe such approaches do not meet the requirements of the Code of Conduct.'
Collins said in-house teams must ensure third parties are clear about their status and relationship with the organization seeking recovery of the debt.
The SRA reminded solicitors that sanctions can include fines up to £2,000 or referral to the Solicitors Disciplinary Tribunal, where the punishments can be much greater.
Payday lender Wonga was the first company to make headlines over the issue after admitting to using fake firms to send legal letters to customers in arrears. The Student Loans Company and banking giants NatWest http://www.lawgazette.co.uk/practice/lloyds-defends-recovery-letters-naming-scm-solicitors/5042018.article and Lloyds all sent letters from their own in-house firms.