Debt management firms warned on future conduct - Debt - News | moneyfacts.co.uk

News

Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Debt management firms warned on future conduct

Debt management firms warned on future conduct

Category: Debt

Updated: 22/03/2012
First Published: 22/03/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The Office of Fair Trading (OFT) has warned debt management firms that they face losing their licences if they do not follow new guidance set out by the regulator.

The debt management sector has increasingly come under the microscope in recent years as more people have run into debt problems.

But many firms have been found to have misled consumers in need of advice.

Now the OFT has outlined a number of unfair practices that if used could see firms stripped of their licences.

This includes sending unsolicited marketing text messages, emails or voicemails to people touting their services.

Some debt management firms charge people for services that are actually available free of charge from the likes of the Consumer Counselling Credit Service or Citizens Advice.

From now on, businesses will be expected to refer customers to such not-for-profit organisations for further help.

Other examples of unfair practices which will be frowned upon include:

  • Providing inappropriate financial incentives to staff giving debt advice, which may encourage them to promote unsuitable debt management products for personal gain.
  • Making false or misleading claims regarding the status of the business; for example, operating websites which look like the website of a charity or a government body.

"This new guidance clearly sets out the standards we expect from debt management businesses," said David Fisher, director of the OFT's Consumer Credit Group.

"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."

The new guidance is part of the OFT's efforts to improve the debt management sector.

The watchdog originally investigated the market two years ago, with 129 warnings made to debt firms as a result of its findings.

Since then 87 businesses have exited the market, either voluntarily or as a result of enforcement action, and a further 67 warning letters have been issued.

Find the Best Debt Solution for you - Compare Debt Solutions

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

 
 
Close