OFT publishes new guidance for the debt management sector.

The Office of Fair Trading (OFT) has published its revised guidance in the debt management sector for consultation.

The guidance revision is following a comprehensive review of the sector in 2010 which found systemic problems in advertising, quality of advice and the handling of client money widespread among fee charging companies. The review in tandem with targeted OFT enforcement aims to address these issues.

Debt management businesses can be under no illusion about the standards that the OFT expects the sector to maintain. They must be fully transparent about the services offered and the fees charged, explain to consumers the risks as clearly as the benefits of any solution. The use of miss-leading advertising such as impersonating a free provider or intimating they are government backed is forbidden. The licensee must implement policies and procedures that ensure that the advice given is in the best interest of the client and provide them with clear advice so they may make an informed decision.

David Fisher, Director of the OFT’s Consumer Credit Group, said:

‘This guidance is designed to leave firms in no doubt about the standards the OFT expects and what they must do to comply with the law. The failings identified by our recent review are unacceptable and show that debt management businesses must raise their standards or face enforcement action.’

The OFT’s move to improve standards is a positive step forward for the industry and the requirement for training and regular auditing improve practices and reduce the number of less reputable providers.

Luke Notley, Director at In Control Debt Solutions Ltd, said:

‘ We welcome any measures to improve standards as we feel that for far too long the industry has been blighted by companies who are not acting in the best interest of their clients. The guidance will ensure that clients are provided with a transparent service, this is a firm belief at In Control that our clients should be very clear about the solution we provide but also receive excellent customer service once they have decided to instruct us.’

The revised guidance is out for consultation to the industry for 12 weeks.