The Office of Fair Trading (OFT) will revoke the client credit licences of 129 financial debt administration companies if they don’t take speedy compliance motion.
The warning to comply with the regulator’s Financial Debt Management Guidance follows an OFT review from the financial debt administration sector which discovered an “unacceptable” degree of non-compliance issues within the business.
These included misleading advertising, adviser incompetence and poor awareness from the Financial Ombudsman Service (FOS).
Independently audited evidence will now need to be submitted by the 129 companies within three months, to demonstrate that they have taken motion to address the regulator’s concerns. If evidence isn’t provided, the OFT will instigate licensing motion.
The OFT mentioned in a statement that it’s also looking to the two primary business bodies, the Financial debt Managers Requirements Association (DEMSA) and also the Financial debt Resolution Forum (DRF), to set an example in raising their requirements and meeting their commitments to be able to “make the business much more professional and responsible.”
Ray Watson, director from the OFT’s client credit group, mentioned: “The degree of non-compliance we discovered across the business is unacceptable.
“Debt administration companies should be clear about their charges and also the choices obtainable to clients. If any from the 129 companies identified don’t enhance their requirements substantially they will probably be the subject of licensing motion by the OFT.”
Misleading advertising was identified as the most substantial area of non-compliance, in specific failing to disclose when a fee is retained by the company and misrepresenting financial debt administration services as being free when they aren’t.
The OFT mentioned it discovered frontline advisers working for financial debt administration companies to be providing poor advice based on inadequate info. The regulator also plans to update its guidance to take explicit account of new and emerging unfair company practices.