Fair Trading Agency Slams Debt Management Businesses

Jack Humphrey, Regulatory journalist
October 11, 2011 /

Three debt management businesses had their licenses revoked by the Office of Fair Trading (OFT) because their names were void of sufficient information about the nature of the business, a thing that should be made clear to consumers.

The OFT has acted to stop London-based Money Advice Direct Limited (MADL) using its existing trading name, ‘The UK Insolvency Helpline’ and the proposed domain names that include the word ‘helpline’.

MADL, which retains its consumer credit licence, has appealed against the OFT’s above decision to vary its licence and the refusal to grant its variation licence application.

The OFT has revoked the licence of Prime Legal and Financial Services (PLFS) of Mile End, London after they failed, amongst other matters, to demonstrate the necessary skills, knowledge or experience to hold a consumer credit licence.

PLFS failed to demonstrate the expected level of competence needed to operate in this industry. The OFT considered that PLFS did not have the necessary skills, knowledge or experience to advise consumers on debt management matters, and also that it didn’t have appropriate business practices and procedures in place.

Midlothian-based Deric Hamilton Oliver’s application for a licence was rejected for giving false information to the OFT.

Deric Hamilton Oliver gave the OFT false information and demonstrated a disregard for the relevant regulatory requirements. The OFT found that Mr. Oliver had provided debt management services even though he was aware he did not have a licence and demonstrated a serious lack of integrity which made him unfit to hold a licence.

Since the OFT’s compliance review a year ago, 61 businesses have had their licence revoked, or have surrendered their licence, or had an application refused. The enforcement action against these three companies is the most recent.

David Fisher, the OFT’s Director of Consumer Credit, said: “We expect commercial debt management businesses to meet the standards that we set out in our guidance. If they do not, we will take action as we have demonstrated here.

“Revised debt management guidance, which is due to be published before the end of the year, will give even greater clarity as to the standards that the OFT expects of businesses that it licenses in this sector.”

The Consumer Credit Act 1974 (the Act) mandates the OFT to ensure that licences are only given to and retained by those who are fit to hold them. Adjudicators issue and determine licensing notices under the Act.

They do so on behalf of the OFT, but make individual and independent decisions on fitness based on the contentions in a notice, the evidence attached to a notice and the representations of those to whom the notices are addressed.

Representations may be made in writing and at an oral hearing. Adverse determinations (a refusal to grant a licence or the revocation of an existing licence) can be appealed to the First Tier Tribunal (Consumer Credit).

If the licence is revoked the OFT’s adjudicator may, under section 34A of the Act, authorise the licensee to carry on specified activities for a specified period for the purpose of winding up or transferring its business to a properly licensed business.

 

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