Debt management firms warned by regulator
The Office of Fair Trading (OFT) has warned debt management firms they face losing their licences if they do not follow new guidance set out by the regulator.
The debt management sector has increasingly come under the microscope in recent years as more people have run into debt problems. Many firms have been found to have misled consumers in need of advice.
Now the OFT has outlined a number of unfair practices that if used could see firms stripped of their licences. These include sending unsolicited marketing text messages, emails or voicemails to people touting their services.
Some debt management firms charge people for services that are actually available free of charge from organisations such as the Consumer Counselling Credit Service or Citizens Advice.
From now on, businesses will be expected to refer customers to such not-for-profit organisations for further help.
“This new guidance clearly sets out the standards we expect from debt management businesses,” said David Fisher, director of the OFT’s Consumer Credit Group, “All too often it may be particularly vulnerable consumers who fall victim to poor quality debt advice and we will continue to take action against businesses that fail to follow our guidance.”