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Debt management industry to be scrutinised

Debt management industry to be scrutinised

Category: Money

Updated: 04/11/2009
First Published: 04/11/2009

MONEYFACTS ARCHIVE
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The debt management industry is set to be scrutinised, as the Office of Fair Trading (OFT) has launched a review of compliance levels in the sector.

Since the last review of the debt management market in 2003, the practices have changed markedly, with a significant rise in the number of entrants and a wide range of business models, including internet-based advertising.

This expansion has come as more consumers seek help to manage their debts, but it is thought many have been duped into signing expensive agreements as a result of deceptive advertising, or having been badly advised.

"A recent increase in formal OFT enforcement action, rising complaints and new problems emerging in the market suggest that some businesses are still not meeting minimum standards," said Ray Watson, OFT director of consumer credit.

"This review will help us identify those practices that are harming consumers, as well as the reasons for non-compliance, and will help us target our enforcement action."

The OFT has taken action against 24 firms failing to comply with regulations in the sector since April last year, including refusing or revoking credit licences.

There are currently around 150 debt management firms in the UK, many of which are fully compliant and negotiate with debt and credit firms to reschedule customers' payment programmes.

However, the OFT has uncovered cases whereby firms pose as charitable or government organisations to mislead customers, or make unlawful cold calls.

The report is set to be published in 2010.

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