Debt resolution company under threat of losing consumer credit licence

A debt resolution company could face closure after coming under fire from the OFT.

First Step Finance Limited is under threat of losing its credit licence having been issued with a ‘Minded to Revoke’ notice by the OFT.

A member of the Debt Resolution Forum (DRF), the Stockport-based company was issued the notice on December 6 last year following an OFT compliance review of the debt management sector.

The OFT took action against a number of companies licensed to provide debt counselling and debt adjustment services in September 2010.

These were primarily small businesses, mainly sole traders, and it is understood that 40 of these businesses have so far surrendered their licences.

It is also understood that just under 40 companies may face serious action, including licence revocation or having conditions imposed on their business operations.  

There are several trade associations that represent both debt solution providers and debt solution intermediaries, notably DEMSA, the DRF and the newly formed Association of Professional Debt Solution Intermediaries (APDSI).

Alasdair Warwood, Secretary General of APDSI said; “We understand that the new OFT debt management guidance is substantially expanded and will be issued in April for consultation.

“This will include more focus on misleading advertising, improving the quality of debt advice and the role of debt solution intermediaries and lead generators.

“The role of APDSI is to help compliant debt solution intermediaries understand the prevailing best practices and regulatory environment in which they operate.

“This includes ensuring that they are properly licensed and understand the rules of marketing to potentially vulnerable consumers. APDSI will be contributing to the consultation process on behalf of its members who want to genuinely assist indebted consumers who are facing increasing hardship in the current economy.”

Vance Parsons, Director of EuroDebt Financial Services, suggests that the actions by the OFT to generally improve working practices and free the debt solution industry of rogue, non-compliant companies are welcomed.

Unfortunately, in the past those companies who did not comply with the OFT’s Debt Management Guidance Notes tended to give the industry as a whole ‘bad press’.

According to Mr Parsons, any action to have these companies closed down or seriously improve standards is good news.

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