Debt management

The OFT has a duty to protect the interests of consumers by ensuring the fitness of those holding or applying for consumer credit licences.

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Revised OFT Debt management guidance issued (March 2012)

Following consultation last year, and an earlier compliance review of the market published in September 2010, the OFT has issued its revised Debt management (and credit repair services) guidance

The guidance sets out the standards the OFT expects from businesses engaged in debt management (and credit repair services) if they are to be considered fit to hold a licence.

• Download the current debt management guidance (pdf 907kb) 
• See press release OFT issues new debt management guidance (22 March 2012)
• Download the Summary of responses to debt management consultation (pdf 808kb) (9 November 2012)

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BIS Select Committee inquiry into Debt Management

The OFT has made a written submission to the Business, Innovation and Skills Committee's inquiry into Debt Management, and appeared before the committee to give oral evidence on 13 December 2011.

• Download the OFT's written submission (pdf 206kb)
• See the Committee's web page on the Debt Management inquiry

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Processing times for licence applications

For more information on processing times for applicants seeking to engage in debt management or to provide debt advice services please see processing times for credit licence applications.

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Review of compliance with the Debt Management Guidance

On 28 September 2010, the OFT published the findings of its review into industry compliance with the Debt Management Guidance (the Guidance). The Guidance, issued in December 2001 and updated in September 2008, sets out minimum standards for those consumer credit licensees which provide debt management services.

As part of the review the OFT found that:

• there is widespread non-compliance with the Guidance by debt advice and debt management licensees, with most debt management firms audited failing to some extent in at least three areas
• misleading advertising is the most significant area of non-compliance, in particular misrepresenting debt management services as being free when they are not
• frontline advisers working for debt management companies generally lack sufficient competence and are providing consumers with poor advice based on inadequate information
• industry awareness of the Financial Ombudsman Service scheme for resolving consumer complaints is low and there is widespread non-compliance with the Financial Ombudsman Service's complaint handling rules
• the two main trade associations, the Debt Managers Standards Association (DEMSA) and the Debt Resolution Forum (DRF), could do more to lead the way by introducing more robust compliance monitoring and auditing systems for their members 
• stakeholders found the Guidance to be clear and understandable but it needs to be updated to cover new emerging practices, and to give greater clarity on expected competence levels, advertising standards, transparency of fees, and the 'best advice' principle, and
• there is a strong expectation and desire that the OFT will continue with its programme of pro-active compliance monitoring and take strong action to remove unfit traders from the market.

The findings from the review will inform the OFT's future compliance strategy for the debt management industry and the findings report contains a detailed action plan for improving standards.

Download the Debt Management Guidance Compliance Review - Findings Report (pdf 592kb) and associated Mystery Shopping Report (pdf 764kb).

See press release OFT takes action to address widespread problems in debt management industry (28 September 2010). 

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Debt management complaints

If you are an adviser or third party organisation and you would like to complain to the OFT about the practices of those providing debt management services, such as Debt Management Companies and those providing advice and assistance with Individual Voluntary Arrangements (IVAs), please download and complete the complaint form (word file 120 kb) and return it to the OFT by post or email.

The OFT complaints evidence checklist (pdf 84 kb) may be helpful when dealing with complaints against traders who carry out any or all of the following activities when provided to debtors who are consumers or individuals under consumer credit agreements:

• advice on how to restructure debts, how to alter debt payments or how to achieve early resettlement of debts
• contacting creditors in order to make any of the above arrangements (whether that contact amounts to 'negotiation' or not)
• providing a facility for the debtor to make a single repayment which is then distributed on his behalf to his creditors, and
• reviews of the debtors' financial circumstances and/or payments.

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Consumer Credit Directive

The Consumer Credit Act and regulations have changed as a result of implementation of the Consumer Credit Directive (CCD). Changes come fully into force on 1 February 2011. Details can be found on the Department for Business, Innovation and Skills (BIS) website (pdf).
 
Relevant OFT guidance will be updated in due course in the light of the CCD changes.

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Debt management guidance for consumers

If you are a consumer and would like more information about dealing with debt and how to seek advice, view OFT1298 - Getting help with your debts (pdf 83kb).

Back to: Consumer Credit Act