OFT shuts down up to 50 debt management companies

At least 50 debt management advice firms have been forced to close or are facing action after an Office of Fair Trading (OFT) review into the industry.



The consumer standards agency announced this morning that 35 debt management firms handed in their consumer credit licences and 15 or more are facing licensing action.



A further 79 firms have submitted evidence and have yet to be reviewed, with further licence withdrawals expected.

This news follows on from the recent news of CAB facing 900 redundancies.



TrustDeedScotland.net, the largest introducers of Trust Deeds in Scotland have backed calls for the Trust Deed and IVA market to also face similar probes.



A spokesman for TrustDeedScotland.net said "There is an estimated 8000 -10,000 trust deeds set to be registered this year and we are finding alarming evidence that there are Trust Deed insolvency practitioners acting irresponsibly. We are hearing of some firms charging setup fees, cancellation fees and other fees that are not in the best interest of their clients.



TrustDeedScotland.net only works with the best IP’s and we are very honest with our clients as to which option is best for them. If it looks like a Trust Deed is not the best option for an individual, we will refer them to a registered debt charity such as the CCCS or a local CAB.



The report today on the OFT findings comes as no surprise, we have found that there are also many debt management companies who do not act in the interest of their clients also."



Today's enforcement announcement follows an OFT warning to 129 firms in September 2010, after its review of the debt management sector found widespread compliance problems.



Ray Watson, director of the OFT's Consumer Credit Group, said: "We are determined to improve standards in this sector, as the failings identified by our review are unacceptable. Companies providing debt management services should be in no doubt that we will act against bad practice and ensure consumers are protected."



The British Banker's Association (BBA) also called for clearer and more consistent debt advice to help Britons struggling under financial pressure today.



Trust Deed Scotland

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