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- Final Warning For Payday Lenders
- Lack Of Work Pushing The Young Into Debt
- Citizens Advice Challenges OFT To Use New Powers
- Protocol Compliant Debt Management Plans Introduced
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- Blame Banks Not Claims Firms?
- Effectiveness Of OFT Addressed By National Audit Office
- First Step Finance Consumer Credit Licence Revoked
- The Problem With Excluding Recent Debts From Trust Deeds
The growing prevalence of personal debt difficulties in the UK has been accompanied with the development of new industries. In particular, debt collection firms, the payday loan industry, and the debt management industry, have become increasingly entrenched and established. Unsurprisingly perhaps, there has been significant controversy attached to each.
While there are no shortage of well-intentioned operators in each of these areas, there have also been significant numbers of rogue operators that have ignored the applicable rules for their financial benefit (often to the significant detriment of those that they work with). Debt collection firms that threaten and harass, payday loan firms milking the financially vulnerable, debt management firms vanishing with their clients’ cash; three sad and common stories that we’ve read periodically in the media in recent years.
These types of businesses fall under the supervison of the Office of Fair Trading (OFT). The OFT issues consumer credit licences that enable individuals and firms to trade, and issue guidance as to the minimum standards of operation that they expect. The problems are that a lot of firms in each of these industries have paid little attention to the rules and guidance, the OFT (supported by Trading Standards) have finite resources to monitor and police them, and the OFT are fighting with one hand tied behind their back when it comes down to shutting down the worst offenders in order to protect consumers.
The final problem now appears to being addressed, with proposals going forwards in The House of Lords to enable the OFT to immediately shut down debt collectors, payday lenders, and debt management firms that pose a serious threat of detriment to UK consumers. As it currently stands a firm threatened with closure can use the appeals process to buy themselves a significant period of time during which they can continue to break rules and profiteer at the expense of their customers. It can take two years to work through the appeals process, a period of time during which a rogue firm can carry on trading.
This autumn it’s expected that the Office of Fair Trading will consult about how they can appropriately use the extended powers. The power itself should come into place at some point in 2013 giving OFT enforcement much greater “teeth” pending the transfer of supervisory control to the FCA in 2014.
Visitors to our trust deed forum (click here to visit) have regularly written about experiences that seem to confirm widespread flouting of the current rules and guidance. Examples have been doorstep lenders making massive loans to formally insolvent persons that could not possibly repay them, debt collectors threatening actions that they are not permitted to carry out, and repeated dodgy debt advice provided by (sometimes unlicensed) individuals and firms. We therefore welcome the potential increase in powers for the OFT which will help to give them the tools they require to protect consumers from firms seeking to take advantage of their financial troubles.
Tags: debt collection firms, debt management, office of fair trading, oft, payday lenders