35 debt management firms close, 15 face actionOFT review leads to license surrender
31 January 2011
The Office of Fair Trading has announced that 35 debt management firms have surrendered their consumer credit licences, and at least 15 are facing licensing action as a result of the OFT’s recent compliance review.
The announcement follows an OFT warning to 129 firms in September, 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
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.
OFT determined to improve debt management standards
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.'
Martyn Saville, Which? debt and credit expert, added: ‘The OFT’s review, as well as previous Which? undercover research, revealed widespread poor practice in the debt management sector. It’s good news for struggling consumers that the OFT is weeding out dodgy companies from the sector.
‘However, it’s also worth repeating once again that there are better, free advice services elsewhere, for example from the Consumer Credit Counselling Service (CCCS), National Debtline and PayPlan. If you want independent expert advice without a fee, ditch the commercial DMCs altogether,’
Which? credit and debt live Q&A - sign up now
Which? Money experts will be answering questions on debt, credit and loans in a live online Q&A session today, Monday 31 January, between 12.30 and 2pm.
You can sign up to the online debt, credit and loans surgery now. Whether you're looking for the best credit card to use abroad, hunting for the best personal loan, want to ask about credit card protection or need independent help in finding the best debt advice service, join us at 12.30 with all your questions.
Debt and credit advice from Which? and the Which? Money Helpline
If you're planning to borrow, read our guides and reviews: credit cards, in-store interest-free credit, credit unions or peer-to-peer lending sites such as Zopa. For details of the best personal loans currently available, read the Which? personal loan reviews.
Which? members can also ring the Which? Money Helpline with any finance-related queries. Find the phone number in your latest magazine.
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what's going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.