The Office of Fair Trading have released a statement announcing that 35 debt management companies have surrendered their consumer credit license and have ceased trading.
The announcement follows on from the warning they issued in September, see our earlier blog, where they ordered 129 debt management companies to start complying with them or risk losing their license.
As well as the 35 who have lost their license, a further 15 could face losing their license after further investigation.
All 129 companies were asked to submit evidence to show that they are complying with the OFT. Out of those, 79 companies submitted their evidence of which the OFT are now reviewing. Seven debt management companies did not respond to the warning and are now being investigated.
*35 debt management companies have surrendered their consumer credit license
*15 face losing their license
*8 companies have had their licenses revoked by the OFT
*7 didn’t respond and are being investigated
*Further 79 and still being reviewed.
Payplan can proudly announce that the OFT had no concerns about us.
If you have any concerns about your debt management company then contact the Office of Fair Trading. You can read their full statement here.
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Written by davemac on January 31st, 2011
Filed Under debt advice, debt help, Debt News, Financial News, Payplan | Trackback | 1 Comment
Andrew F Smith says There is another side to all this (speaking as a director of a fee-charging debt management firm and as spokesperson for one of the industry’s two trade associations (Debt Resolution Forum).
What the OFT is doing, with the assistance of most of the fee-charging debt resolution industry, is creating a sector which consumers and creditors can trust – and doing it pretty darn fast too. And – it’s going to be needed.
The OFT’s action has driven out a number of dilettantes and those who can’t be bothered to accept a burden of regulation.
The industry itself is shaping up – fast. First, the OFT’s requirement for an audit of compliance was historic – in most case it related to trading standards reviews made between autumn 2009 and spring 2010 and, for many firms, their response to the OFT was confirmatory – the changes required had already been made. So, the comment that companies were ordered to start complying in September is not strictly accurate – that is when the OFT asked for evidence of compliance: Most had fixed the problems that had been drawn to their attention months before.
Secondly, there is real commitment, from a large section of the industry, to all the regulation that’s necessary to remove consumer detriment. Debt Resolution Forum (DRF) offers an advanced BTEC (the Certificate in Debt Resolution – CertDR) requiring more than 120 hours study and with three examinations: Members have to commit to their client facing staff either taking this or being trained to an equivalent standard.
DRF requires members to go through an annual independent audit from the Insolvency Practitioner’s Association (a regulator trusted by government) and DRF has an independent complaints panel chaired by David Hawkes, NAtional Money Advice Co-ordinator of Advice UK.
It’s early days for both these initiatives but the commitment is there.
And the OFT will continue to challenge us: We’ll shortly see a consultation on new debt management guidance that will raise the bar further.
Why bother though, with all the free advice that’s available. Well first, free advice is not always best advice (but i recognise that I would say that – wouldn’t I). More to the point, the free sector has a capacity issue, they themselves say they could only deal with half the enquiries they received. Now, after Citizen’s Advice’s announcement of up to 900 redundancies, their capacity is slashed.
Then, the government’s attitude is changing. “Free” debt advice is often taxpayer funded – so not free at all. And many debtors can actually afford the fees they pay – as can (and perhaps should) their creditors. Most creditors factor the cost of defaulters into each product when they design it. So any debt recovery the banks and credit card companies make is actually bunts. Why not squeeze their margins a little and get them to share, with the debtors, the cost of debt advice and resolution? This does seem signposted by the Department of Business Innovation and Skills/Treasury call for evidence on credit and debt regulation.
So – what we are seeing is the rapid evolution of an industry sector from unregulated and seen as unhelpful to consumers to well-regulated and a required part of the UK economic scene. After all, we have an economy partly fuelled by consumer spending and you need credit to spend (nobody saves anymore). More credit means more debt.
Seems, in people’s financial lives, there is nothing certain except debt and taxes.
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