OFT Threatens To Close Half Of British Debt Management Firms
London, England, United Kingdom (AHN) – Britain’s Office of Fair Trading warned on Tuesday half of the debt management companies in the country that they could be closed for failure to follow the Debt Management Guidance.
The warning was the result of an OFT study of debt management practices in the industry, which showed various problems. The OFT identified the three major problems as: • Misleading advertising, particularly non-disclosure of certain fees • Lack of competence and giving by frontline advisers of poor advice based on insufficient information • Low industry awareness on the availability of ombudsman to resolve consumer complaint.
OFT Director of Consumer Credit Group Ray Watson pointed out most of the clients of debt management firms are people who are heavily indebted, desperate and vulnerable. He said it is the obligation of such companies to make the financial situation of their clients better and not to exploit them. Watson pushed that debt management firms must be transparent about their charges and well as make available other options to their customers.
Watson said in a statement, “The level of non-compliance we found across the industry is unacceptable.”
The OFT has initiated 37 formal actions against debt management companies since April 2008 when it got new powers under the Consumer Credit Act. Among the actions the agency has taken were to place additional requirements or revoke the licenses of the affected firms. Watson warned the 129 companies the OFT will subject them to licensing action if they do not improve their standards substantially.
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