MSE News: 50 dodgy debt firms face the axe

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"Consumers will be faced with fewer dodgy debt management firms after 50 either voluntarily quit the sector or are set to be expelled ..."

Read the full story:
50 dodgy debt firms face the axe

RAS

And of the just shy of 200 firms who are visited, the OFT found ninety two (92) percent were non-compliant. OK a few might have only had one small problem but it would be quite reasonable to say that that of the companies visited, nearly all were dodgy.

May be why Martin recommends debt charities?

clayre1979

Completely agree with you RAS!

This is great news, and will hopefully mean I get less pest calls from companies offering their services to sort out my "out of control" debts...at a charge of course!

Billy_two_speakers

http://www.bbc.co.uk/news/business-12310290

Yevvie

Interesting news from BBC website..

"The licences of 35 debt management firms have been surrendered to the Office of Fair Trading because they could not show that they met its rules.

Another eight firms have been told that their licences will be revoked and seven are being investigated.

Debt management companies charge fees to advise on debt problems.

The OFT has been involved in a continuing campaign to stop rogue firms making false promises and levying unfair fees.

The Financial Ombudsman Service (FOS) has seen a 25% increase in complaints about debt management companies since last spring...."


Read more @: bbc.co.uk/news/business-12310290

fermi

Copy of the OFT press release.

http://www.oft.gov.uk/news-and-updates/press/2011/10-11

OFT update on debt management enforcement action

10/11 28 January 2011

The OFT today announced that 35 debt management firms have surrendered their consumer credit licences and at least 15 are facing licensing action as a result of an OFT compliance review.

The firms subject to licensing action have the right to make representations to an adjudicator before a final decision is made.

Today's announcement follows an OFT warning to 129 firms in September 2010, after its review of the debt management sector found widespread problems with compliance.

Since this warning was issued:

• 35 firms have surrendered their licences
• eight firms have been informed that the OFT intends to revoke their licences
• a further seven companies who did not respond are currently being investigated, and
• 79 firms have submitted evidence, which the OFT will now review.

All firms were asked to provide evidence of compliance measures by 16 December 2010.

The OFT is currently analysing the content of the audit reports received from 79 firms and will contact each business to discuss its findings. Those who fail to meet compliance standards may also find themselves subject to licensing action.

As well as taking enforcement action, the OFT is updating its debt management guidance to take account of new and emerging unfair business practices identified in the course of its review.

Ray Watson, Director of the OFT's Consumer Credit Group, said:

'We are determined to improve standards in this sector, as the failings identified by our review are unacceptable. Companies providing debt management services should be in no doubt that we will act against bad practice and ensure consumers are protected.'

NOTES

1. Read the press release on the OFT's September 2010 warning.
2. Details of all recent OFT actions are on the public register.
3. To read the full findings of the compliance review, please see the Debt management guidance compliance review (OFT1274) (pdf 592kb)
4. The OFT is not able to name the companies subject to today's announcement because of disclosure restrictions under Part 9 of the Enterprise Act 2002. Where the OFT uses its formal powers under the Consumer Credit Act 1974 to refuse or revoke a credit licence, decisions are made public on the Public Register.
5. The Consumer Credit Act 1974 (the Act) places a duty on the OFT to ensure that licences are only given to and retained by those who are fit to hold them. The OFT's Debt Management Guidance (updated September 2008) sets out the minimum standards for this industry. The OFT takes the view that a failure to adhere to the minimum standards in the Guidance could in certain circumstances be considered to be engaging in business practices which are unfair or improper (whether lawful or not) under Section 25(2A)(e) of the Act.
6. Adjudicators issue and determine licensing notices under the Act. They do so on behalf of the OFT, but make individual and independent decisions on fitness based on the contentions in a notice, the evidence attached to a notice and the representations of those to whom the notices are addressed. Representations may be made in writing and at an oral hearing. Adverse determinations (a refusal to grant a licence or the revocation of an existing licence) can be appealed to the Consumer Credit Appeals Tribunal. If the licence is revoked the OFT's adjudicator may, under section 34A of the Act, authorise the licensee to carry on specified activities for a specified period for the purpose of winding up or transferring its business to a properly licensed business.

SnowMan

Good news of course. But even if all the dodgy debt firms are closed down where are people going to go for advice? Of course we all rightly say here go to one of the free debt advice services offered by the charities CCCS, National Debtline or Citizens Advice. But with government plans to severely restrict the funding of face to face debt casework within the voluntary sector many people are going to get turned away and end up going to the remaining dodgy commercial debt firms.

Paul Hoban, Financial secretary to the Treasury, in a shocking attack on those in greatest need has announced this month the closing down of the Financial Inclusion Fund (FIF) at the end of March. FIF funds 500 face to face debt advisers in Citizens Advice bureau and other not for profit advice centres.

And then there are the plans to abolish legal aid which will again mean no debt advice under legal aid unless someone is on the very edge of repossession.

Many CABs are in danger of shutting also partly due to the end of FIF and legal aid and so other debt advice given by those bureaux will not be available.

Even if common sense prevails and there is a last minute decision to continue the funding for FIF or some replacement (albeit it is not looking good), how many experienced debt advisers will have already left knowing their jobs were likely to come to an end.

So as we see the deficit reduction lead in the short term to more job losses and more people left tackling debts, the government of the day thinks decimating free debt advice services which actually don't cost that much is a good idea. Surely everyone knows that tackling debts at an early stage is vital. If there is no free advice available to someone in debt when they need it then debt problems are likely to spiral out of control and the resulting social effects including homelessness will result in costs to the government massively in excess of any small saving through cutting this funding. So it is an incredibly short sighted move.

So good news that 50 dodgy firms are being shut down but the real news story is the shutting down of free debt advice offered by the voluntary sector. An MSE news item on that is very much needed.

WhiteHorse

No tree could be high enough to hang these people from.

pixwix

50 down..... Only 950 to go then????;)

out_of_cash

any chance we can see whos on this list would love to see if some of my old scum bag dcas are on it:beer::beer::beer::D:D:D:D:D:D:T:T:T:T:T:T:T:T

Nitha

here's hoping Mackenzie Hall are on that list and have finally got what they deserve!