MSE News: OFT publishes new debt management guidance 14 June 2011 at 3:29PM in Debt-free wannabe 2 replies 1.9K views

Former_MSE_Helen

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

" The OFT has revised its debt management guidelines in a bid to crackdown on "unacceptable" practices by some firms ..."

Read the full story:
OFT publishes new debt management guidance

fermi

If you want to read the consultation document and draft guidance, then it is here.

Download the updated guidance (pdf 866kb);

OFT press release is below.

http://www.oft.gov.uk/news-and-updates/press/2011/65-11

Press releases 2011 -

Revised debt management guidance published

65/11 14 June 2011

The OFT today published for consultation revised guidance for the debt management industry.

The guidance update follows a review of compliance in the sector which found, amongst other things, widespread problems with misleading advertising and the quality of advice given in the fee charging sector.

Together with targeted OFT enforcement, the revised guidance is designed to address the issues identified by the review.

Today's guidance sets out the standards the OFT expects of debt management businesses and makes clear they must:

• be fully transparent about the service on offer and fees charged
• explain to consumers both the risks and benefits of each proposed solution
• not use misleading names or advertising, including misleading web-based adverts, and
• ensure that the advice provided is in customers' best interests.

The overall theme of the guidance is increasing transparency and ensuring that consumers have all the information they need to make an informed decision about the solution most appropriate for them.

Where appropriate, the OFT will take enforcement action against businesses failing to adhere to the guidance.

Since the OFT published the findings of its compliance review in September 2010 and issued a warning to 129 debt management businesses, 43 businesses have surrendered their licences and action has been taken to revoke 11 consumer credit licences.

Consumers looking for debt advice can contact free advice services via www.direct.gov.uk.

David Fisher, Director of the OFT's Consumer Credit Group, said:

'This guidance is designed to leave firms in no doubt about the standards the OFT expects and what they must do to comply with the law. The failings identified by our recent review are unacceptable and show that debt management businesses must raise their standards or face enforcement action.'

NOTES

1. Download the updated guidance (pdf 866kb); this is also available from the consultation page.
2. The revised guidance was referenced in the OFT's response to the super-complaint from Citizens Advice, 'Cashing in', which relates to problems in the sub-prime credit brokerage and debt management sectors.
3. Although the guidance primarily covers debt management services, it also includes guidance for those offering credit repair services.
4. Download the findings of the compliance review (pdf 591kb). Please also see previous OFT press releases on the warning to 129 firms and subsequent enforcement activity.
5. Consumers can check whether a company has a Consumer Credit Licence by searching the Consumer Credit Licence Public Register, which can also be accessed from the credit licensing page.

Rednelly_2

The Debt Resolution Forum, one of the trade associations representing debt management fee-chargers, had this to say

DRF Welcomes New Debt Management Guidance From OFT

Posted by - 14 Jun 2011
Debt Resolution Forum, the training, monitoring and representational body for fee-charging debt resolution companies welcomed the publication of proposed new debt management guidance by the Office of Fair Trading today, Tuesday June 14.

Commenting David Mond, DRF Chairman and CEO of debt resolution company, ClearDebt, said:

"Whilst we need to examine the consultation document in detail, in many respects, the new guidance just formalises best practice as already undertaken by the majority of DRF members.

"We particularly welcome new recommendations that debt resolution companies should be independently audited every year and that staff should be trained to standards akin to our advanced BTEC - the Certificate in Debt Resolution.

"DRF provides independent audit through its association with government-trusted regulator, the Insolvency Practitioners Association (IPA) and DRF's members are therefore already ahead of the game.

"DRF is also pleased to see the new requirements on lead introducing companies which, we believe, will put an end to needless cold-calling and ensure consumers are clear whom they are dealing with. DRF has just introduced a new membership category for lead introducers, who will be able to be audited to verify their compliance with the OFT's guidelines and will thus be able to assure DRF members that they are working with partners whose standards match their own.

"We were very pleased to note that the guidance incorporates an amendment put forward by DRF which will allow reputable debt resolution companies to make monthly payments to the creditors of weekly-paid debtors, something which has previously disadvantaged the lowest paid".

- ENDS -


Note for Editors:

The Debt Resolution Forum (DRF) is the largest training, monitoring and representational body for fee-charging debt resolution companies. It is the training and examination centre for the sectors leading qualification - the level three BTEC Certificate in Debt Resolution (CertDR), currently held by more than 100 advisors and being studied for by nearly 300 more. DRF members are required to subject their procedures, processes and marketing materials to annual onsite inspection by insolvency recognised professional body, the Insolvency Practitioners Association (IPA). Customers of DRF members have recourse to an independent complaints panel, with a majority of lay members, chaired by David Hawkes - the National Money Advice Co-ordinator at the Charity Money Advice UK.