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OFT focuses on "vulnerable consumers" with new debt management guidance 22 March 2012

The Office of Fair Trading (OFT) has put “vulnerable consumers” at the forefront of its revised debt management guidance.

Susceptible clients – particularly those with mental difficulties – should instead be referred to debt charities by credit repair services and debt management firms.

The guidance has also called for more sector transparency to help give consumers all the required information for making the best debt solution decisions.

It follows a compliance review undertaken in 2010 by the OFT which found “widespread concerns” in the market.

Among the issues raised were advertising and marketing practices, as well as the quality of advice given by firms.

Following the review the OFT has issued 129 warnings to debt management businesses and sent a further 67 warning letters.

The OFT claims 87 firms have since left the market either voluntarily or due to enforcement action.

OFT Consumer Credit Group director, David Fisher, said: “This new guidance clearly sets out the standards we expect from debt management businesses.

“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.”

The guidance has expanded on examples of ‘unfair or improper practices’ which could lead to the loss of a firm’s consumer credit licence.

Among the cases are sending ‘unsolicited marketing text messages, email or voicemails’ and issuing ‘inappropriate’ financial incentives to staff giving debt advice.

It also looks to clamp down on firms making ‘false or misleading claims’ about the business, such as operating websites which appear to run by a charity or government body.

 

 

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