The OFT has published new guidance as to the standards it expects from businesses offering debt management advice or credit repair services to the public. Specifically they have issued example of “unfair or improper practises” which if a businesses is found to be engaging in them could lead to them losing their Consumer Credit License.
The practices that they consider to be “unfair or improper” include:
- Sending unsolicited texts or email messages
- Providing inappropriate financial incentives to staff offering Debt Management Services which may encourage them to promote the wrong products for their own financial gain
- Making false or misleading statements about the status of their business, for example, giving the impression from websites that they operate as a charity or government body
There is also a requirement on businesses to refer consumers to ‘not-for-profit’ advisory services in certain circumstances and to have measures in place to deal with those who may be most vulnerable such as the elderly or those of limited mental capacity.
This latest guidance is a follow on from the review of the sector conducted in 2010 which revealed widespread concerns with the advertising and marketing practises of the industry and the calibre of advice given. David Fisher, Director of the OFT’s Consumer Credit Group, said:
‘This new guidance clearly sets out the standards we expect from debt management businesses. All too often it may be particularly vulnerable consumers who fall victim to poor quality debt advice and we will continue to take action against businesses that fail to follow our guidance.’
While this extra guidance and any measure to improve standards in the industry has to be welcomed we do also note with concern that it appears to be proving a little difficult to implement. We are aware, for example, the the process of getting a Consumer Credit License has become much more arduous to the point where the system seems to be seizing up. One firm that applied last October 2011 to extend their CCL from Category C to also include Categories D & E (those required for firms handling Debt Management Services enquiries) were recently told that the process may take until February 2014 to resolve!
While the industry has had some poor performers let it down and the OFT are right to take a considered view in issuing licenses, the fact remains that those who perform well in this industry do provide a good service and to prevent others from joining the market on what appears to be a ‘guilty until proven innocent’ will not serve the public or the industry well in the long run. We do hope the OFT gets to grips with these new guidelines again as soon as possible, speeds up the CCL issuing process and the market can return to more efficient service-oriented operation.
If you need help with Debt management then please visit our page here to contact a qualified professional advisor or call us on 0845 1260350