28 September 2010
OFT issues legal warning to 129 debt management firms
More than 100 debt management companies in the UK have been warned that they could have their license to practice revoked if they continue with their noncompliance of statutory regulations.
The Office of Fair Trading (OFT) has informed 129 such employment organisations that they must take immediate action in order to abide by its Debt Management Guidance rules, or else they could face legal action.
An investigation by OFT - which included onsite visits from officers from the body as well as mystery shopping and online scrutiny - found that many firms in Britain are committing breaches of their licensing agreement through measures such as false advertising and incompetence among their employees.
Meanwhile, it was also discovered by the OFT - which seeks to protect the rights of consumers in the UK - that there is low awareness among companies in the industry about the role of the Financial Ombudsman Service in resolving customer complaints.
Ray Watson, director of OFT's consumer credit group, labelled these breaches of practice "unacceptable".
He added: "Debt management firms must be clear about their charges and the options available to customers."
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Posted by Cheryl Bennett