OFT threatens 129 debt firms with licence revoke 28 September 2010
Steven Jackson (about the author)

The Office of Fair Trading (OFT) will revoke the consumer credit licences of 129 debt management firms if they do not take immediate compliance action.

??The warning to comply with the regulator’s Debt Management Guidance follows an OFT review of the debt management sector which found an "unacceptable" level of non-compliance issues in the industry.??

These included misleading advertising, adviser incompetence and poor awareness of the Financial Ombudsman Service (FOS).

??Independently audited evidence will now have to be submitted by the 129 firms within three months, to demonstrate that they have taken action to address the regulator’s concerns. If evidence is not provided, the OFT will instigate licensing action. ??The OFT said in a statement that it is also looking to the two main industry bodies, the Debt Managers Standards Association (DEMSA) and the Debt Resolution Forum (DRF), to set an example in raising their standards and meeting their commitments in order to "make the industry more professional and responsible.

"??Ray Watson, director of the OFT’s consumer credit group, said: "The level of non-compliance we found across the industry is unacceptable. ??"Debt management firms must be clear about their charges and the options available to customers. If any of the 129 firms identified do not improve their standards substantially they will be the subject of licensing action by the OFT."

??Misleading advertising was identified as the most significant area of non-compliance, in particular failing to disclose when a fee is retained by the business and misrepresenting debt management services as being free when they are not.??

The OFT said it found frontline advisers working for debt management firms to be providing poor advice based on inadequate information. The regulator also plans to update its guidance to take explicit account of new and emerging unfair business practices.