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Debt Management Standards

The Office of Fair Trading (OFT) has amended its Debt Management Guidance that covers the standards it is expecting from organisations that furnish debt management advice or deliver credit repair services to people. Businesses include organisations or individuals that don’t charge for their assistance or are non-profit seeking, which include charities. The guidance was originally published in 2001 and was updated in 2008 and it sets out the benchmarks for the industry.

The current version differs from older versions insofar as it provides plenty of examples of ‘unfair or improper practices’ which if engaged in, could possibly render a business unfit to hold a consumer credit license and thereby not be able to function in the market.

The general theme of the guidance is the importance of businesses to be transparent in order that clients have all the knowledge essential for them to arrive at assured judgements with regards to the most suitable debt solutions for them, given their financial position.

Debt Management Plan

Firms that fail to keep to the requirements laid down put themselves at risk from enforcement measures by the OFT that could cause the most significant sanction of losing their consumer credit license. Failure to stick to the published standards could be thought of as participating in unfair or improper business practices, whether illegal or not, and could be regarded as evidence leading to formal OFT action.

The OFT highlights three unfair practices which it has cracked down on in recent years: sending unsolicited marketing text messages, emails or voicemails; making false or unfounded claims with regards to the status of the debt management business, such as operating websites which look like the website of a charity or of a government body and even incentivizing debt advice staff to the extent that they may promote inappropriate debt management products for personal financial gain.

Businesses are also expected to point people in certain situations to not-for-profit advice organisations for further help and to keep robust measures set up to identify and deal with vulnerable individuals, such as people who have mental capacity challenges.

The guidance also encourages borrowers to proactively engage in the debt recovery operation by especially communicating appropriately and regularly with their creditors either directly or through their appointed representative. Current and correct information and facts ought to be imparted in particular concerning any change in circumstances that could be likely to appreciably impact on the ability of the debtor to fulfill their repayments.

Marketing, client communication, the quality of advice proffered, supply of pre-contract facts, consumer agreements, consumer information documents and the nature of the debt management program itself are the primary things targeted under the heading of Unfair or Improper Business Practices.

The 96 pages long document furthermore lays out the Fitness to Practice standards needed plus the scale and reason for the guidance. It sets out the Overarching Principles of Fair Business Practice and the OFT’s approach to Regulatory Compliance and Enforcement.

Following last year’s OFT clampdown on dodgy debt management companies, 87 firms departed the market and it is probable that the upgraded standards spelled out in this document will result in a further shakeout in the sector, due to the higher cost of compliance. While there could be a loss in competition, it is certain that debt management will be a a great deal more attractive and safe experience for the financially burdened individual to avail of. The full document can be seen on or down loaded from the OFT website at

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