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OFT imposes requirements on new credit repair business
86/09 17 July 2009
A new entrant to the credit repair market, Mr Michael Reginald Penwill, must meet requirements imposed on him by the OFT before his business can start trading.
The OFT imposed requirements when it issued a consumer credit licence to sole trader Mr Penwill to ensure that his business meets minimum compliance standards. This followed an OFT investigation into his fitness to be granted a licence which revealed room for improvement in his knowledge of the legislation relating to the provision of credit repair services and of the OFT's debt management guidance.
As a result of these requirements, the trader must:
Mr Penwill cannot start trading until he has complied fully with the requirements and provided evidence to Bournemouth Trading Standards Service that he has done so.
The Consumer Credit Act 2006, which came into force in 2008, now requires the OFT to take 'credit competence' into account when assessing licence applications and gives the OFT new powers to impose 'requirements'.
Ray Watson, Director of the OFT's Consumer Credit Group said:
'In considering fitness to hold this type of licence, it is the OFT's job to protect consumers from traders who do not demonstrate the necessary level of skill, knowledge and experience to run a new business offering credit repair services.
'We are issuing a licence to Mr Penwill on the basis of these requirements. It is important that all traders can meet the minimum standards expected for their industry in order that consumers can be protected from poor practice.'
NOTES
1. The OFT issued guidance for providers of debt management services in 2001 (updated in September 2008). The Debt Management Guidance (the guidance) sets out minimum standards of behaviour expected of licence holders and applicants who seek to re-schedule customers' repayment of debt and charge for doing so. Key principles of the guidance are that advertisements and other promotional material must be accurate and clear and must not mislead, either expressly or by implication or omission. The spirit as much as the letter of the guidance would apply to businesses engaged in the provision of commercial credit information services, including credit repair.
2. Following implementation of the OFT's new powers under the Consumer Credit Act 2006 (which amends the Consumer Credit Act 1974) on 6 April 2008, where the OFT is dissatisfied with any matter in connection with a business, including a lack of credit competence, the OFT may impose 'requirements' on the licensed business. If a single requirement is not complied with, the business concerned could be subject to a financial penalty of up to £50,000. The OFT may also refuse or revoke a licence if it decides that a trader is not fit to hold one.
3. From 1 October 2008 those providing credit information or credit repair services must be licensed. Both the Consumer Credit Act 1974, as amended, and the Data Protection Act 1988 grant consumers a right of access to their credit reference files and where necessary a right to have inaccurate information corrected. Consumers can obtain a copy on request for a fee of £2. Details of how to go about doing this are contained in the ICO's published guidance 'Credit Explained', available on the Information Commissioner's Office website.
4. The fact that requirements have been imposed on Michael Reginald Penwill appears on the Consumer Credit Register. Any complaints about non-compliance should be sent to:
Enquiries
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London
EC4Y 8JX
Enquiries@oft.gsi.gov.uk
5. For advice on dealing with debt, see the Directgov website or visit your local Citizens Advice bureau.
86/09 17 July 2009
A new entrant to the credit repair market, Mr Michael Reginald Penwill, must meet requirements imposed on him by the OFT before his business can start trading.
The OFT imposed requirements when it issued a consumer credit licence to sole trader Mr Penwill to ensure that his business meets minimum compliance standards. This followed an OFT investigation into his fitness to be granted a licence which revealed room for improvement in his knowledge of the legislation relating to the provision of credit repair services and of the OFT's debt management guidance.
As a result of these requirements, the trader must:
- undertake additional formal training on credit repair and debt management, and
- amend his business processes and procedures, including promotional and advertising material, to bring them into line with OFT debt management guidance.
Mr Penwill cannot start trading until he has complied fully with the requirements and provided evidence to Bournemouth Trading Standards Service that he has done so.
The Consumer Credit Act 2006, which came into force in 2008, now requires the OFT to take 'credit competence' into account when assessing licence applications and gives the OFT new powers to impose 'requirements'.
Ray Watson, Director of the OFT's Consumer Credit Group said:
'In considering fitness to hold this type of licence, it is the OFT's job to protect consumers from traders who do not demonstrate the necessary level of skill, knowledge and experience to run a new business offering credit repair services.
'We are issuing a licence to Mr Penwill on the basis of these requirements. It is important that all traders can meet the minimum standards expected for their industry in order that consumers can be protected from poor practice.'
NOTES
1. The OFT issued guidance for providers of debt management services in 2001 (updated in September 2008). The Debt Management Guidance (the guidance) sets out minimum standards of behaviour expected of licence holders and applicants who seek to re-schedule customers' repayment of debt and charge for doing so. Key principles of the guidance are that advertisements and other promotional material must be accurate and clear and must not mislead, either expressly or by implication or omission. The spirit as much as the letter of the guidance would apply to businesses engaged in the provision of commercial credit information services, including credit repair.
2. Following implementation of the OFT's new powers under the Consumer Credit Act 2006 (which amends the Consumer Credit Act 1974) on 6 April 2008, where the OFT is dissatisfied with any matter in connection with a business, including a lack of credit competence, the OFT may impose 'requirements' on the licensed business. If a single requirement is not complied with, the business concerned could be subject to a financial penalty of up to £50,000. The OFT may also refuse or revoke a licence if it decides that a trader is not fit to hold one.
3. From 1 October 2008 those providing credit information or credit repair services must be licensed. Both the Consumer Credit Act 1974, as amended, and the Data Protection Act 1988 grant consumers a right of access to their credit reference files and where necessary a right to have inaccurate information corrected. Consumers can obtain a copy on request for a fee of £2. Details of how to go about doing this are contained in the ICO's published guidance 'Credit Explained', available on the Information Commissioner's Office website.
4. The fact that requirements have been imposed on Michael Reginald Penwill appears on the Consumer Credit Register. Any complaints about non-compliance should be sent to:
Enquiries
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London
EC4Y 8JX
Enquiries@oft.gsi.gov.uk
5. For advice on dealing with debt, see the Directgov website or visit your local Citizens Advice bureau.
