Credit Licenses Refused As The OFT Drives Up Industry Standards
The Office of Fair Trading (OFT) has ramped up its efforts to drive up standards in the financial sector by refusing to grant credit licenses to three debt management companies, says IVA broker IVAOnline.co.uk.
Credit licenses are awarded to companies that operate a consumer-based credit business and have shown they are fit to do so. The three companies that were refused licenses - Lancashire-based Welcome Solutions Limited, Manchester-based Debt Connect (UK) Limited, and Cornwall-based trader Rowena Koning – are among the first to be rejected for licenses by the OFT as part of its ongoing drive to improve the debt management sector’s standards.
Welcome and Debt Connect were considered to have engaged in unfair or improper business practices, which included falsely claiming or implying that debt advice was free and impartial, publishing misleading or false testimonials, providing inaccurate and misleading information and not having proper practices and procedures in place. At the same time as refusing to renew the license of Debt Connect, it also revoked the associated license of claims Management Company Connected Claims Limited.
Part of providing a debt management consumer credit service is having the necessary skills, knowledge and experience to do so, and in this respect all three companies fell short of what the OFT requires. In particular, Rowena Koning was considered to have too little training and experience, which would make her heavily reliant on third party support when it comes to compliance matters.
Since 2010 the OFT has either refused to renew or grant 100 licenses in the debt management sector, and David Fisher, OFT Director of Consumer Credit, said: “The OFT will not hesitate to refuse licenses to those who cannot establish that they are fit to operate a debt management business and we will revoke existing licenses when necessary. Our goal is to ensure that people in financial difficulty who pay for debt advice can be confident that they are dealing with businesses that are competent to give them good advice.”
A spokesperson for IVA broker IVAOnline said: “Driving up the standards in the debt management sector has been a priority for the OFT since 2010. Debt management companies that persistently flout the Consumer Credit Act (1974) will be targeted to prevent them from imposing unfair or improper business practices on consumers and this can only be a good thing. People in debt are often desperate and very vulnerable, and companies that prey on them thinking they are easy to manipulate have no business being in business. They are certainly not helping consumers. They’re only helping themselves.”
Both Welcome and Debt Connect (UK) can now appeal against the OFT’s decision within 28 days if they wish, although until the appeal is concluded they will still be allowed to continue trading. If they do not wish to appeal their licenses will be revoked. An appeal has already been made by Mrs Koning and has been dismissed by the First-Tier Tribunal (Consumer Credit).