The Office of Fair Trading (OFT) in September 2008 published Debt Management Guidance OFT366 in which it addressed the issue of creditors refusing to enter into negotiations with Debt Management Companies (DMC). This is what the OFT had to say in this publication:
DMC acting as an agent for a consumer debtor
1.17 During the original consultation on this guidance the OFT was told that some creditors have a blanket policy of refusing to enter into negotiations with some DMCs or even refusing to accept payments sent by DMCs on behalf of consumers. The OFT is concerned at these reports, especially those suggesting payments are refused.
1.18 Where a consumer appoints a representative to negotiate on their behalf, it is an unfair and improper business practice on the part of the creditor to operate a policy, without reason, of refusing to consider such requests.
1.19 Where a creditor wishes to refuse to negotiate with a particular representative, it must make its position known to the representative and also immediately inform any consumer on whose behalf the creditor is approached by that representative.
1.20 Where payments are tendered, not by the debtor personally, but by someone acting on his/her behalf, it is a principle of law that creditors cannot refuse to accept those payments. The practice of creditors returning payments, or not crediting payments to consumers’ accounts, purely because they are received through a DMC, therefore, is not acceptable and is a matter which the OFT regards as seriously detrimental to the fitness of the creditor. This is so even in circumstances where a creditor has indicated that it will not negotiate with a DMC acting as a representative of a debtor.
Referrals to DMCs
It also emerged in the consultation that some lenders and credit brokers refer consumers to DMCs as potential clients. There is no objection to this provided it is done with the informed and prior consent of the consumer. Referrals made without this consent will affect the fitness of the lender or broker.