35 debt management firms close, 15 face action

The Office of Fair Trading has announced that in its latest action to curb wayward practices in the ‘debt management’ sector that 35 debt management firms have surrendered their consumer credit licences, and at least a further 15 firms are facing licensing action as a result of the OFT’s latest compliance review.

The announcement is on the back of a stern OFT warning to some 129 firms in September of 2010 which was prompted after the OFT reviewed the debt management sector and alarmingly, found widespread problems with compliance.

In fact, since the OFT warning was issued, and in addition to the actions outlined above, a further eight firms have been informed that the OFT intends to revoke their licences, a further seven companies who did not respond to the OFT are currently being investigated and some 80 firms have now submitted evidence to the OFT will is now being reviewed.

As well as taking this enforcement action, the OFT has said it intends to continue to route out any other problems with compliance and it is updating its debt management guidance to take account of any new or emerging unfair business practices which could be 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,’

Debt is a serious issue and at CCDR we are obviously engaged in the practice of recovering debts on behalf of our clients, collecting debts as part of agreed debt repayment arrangement plans but also services such as debt mediation, where perhaps legal debt recovery practices may be unsuitable or not best practice in order to resolve the situation.

The difference between a debt recovery firm like CCDR (Corporate Credit Debt Recovery ltd) and a debt management firm is that we seek to recover a debt, whereas debt management firms are meant to help individuals come to arrangements with their creditors by implementing a debt management plan.

To put it simply, a debt management plan reduces the monthly amount an individual pays towards their unsecured debts and allows them to repay the money they owe by making single monthly payments, which means your finances should be easier to manage. Creditors aren`t obliged to accept any new repayment terms suggested in a debt management plan, but they are more likely to do so if they can see people really cannot afford to repay their debts as originally agreed to.

The problem is that many in debt who turn to debt management firms for advice are finding that the fees for such services are not always clear or as in these cases, that wholly misleading practices are being undertaken and it is this practice the OFT is seeking to route out and stop.

For more info on services such as debtor tracing, ongoing business reports, or commercial debt collection, simply get in touch an enquire about our ‘no recovery, no fee’ debt recovery services.

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