The Office of Fair Trading has reminded businesses about changes to the consumer credit licensing regime that come into force in the autumn.
From 1 October, businesses offering debt administration or credit information services (which may include credit repair) will need to be appropriately licensed by the OFT.
The new debt administration licence category is required by those businesses wishing to administer debts under consumer credit or consumer hire agreements on behalf of the creditor.
The OFT considers aspects of both debt administration and credit information services, in particular credit repair services offered on a ‘commercial’ basis, to constitute high risk credit activities.
Consequently, businesses applying for these licence categories are likely to be subject to additional scrutiny at the application stage and may be subject to on-site inspections to assess their competence to engage in these activities.
Any business carrying out these activities from 1 October onwards, without an appropriate licence, is likely to be committing a criminal offence and could face prosecution. Businesses are encouraged to apply early for any new licence categories they may need in order to ensure that their applications can be processed before the 1 October deadline.
David Philpott, OFT deputy director of Consumer Credit, said: “The requirement for businesses that wish to provide these services to be licensed by the OFT is an important part of the Government’s reforms to further strengthen the regulation of credit markets.
“Businesses wishing to provide these services from 1 October onwards will need to satisfy the OFT that they are fit to do so.”