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OFT removes licences First Step Finance, Welcome Solutions Ltd , Debt Connect (UK)
The OFT has removed the licences of three debt management businesses.
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The OFT has removed the licences of three debt management businesses.
First Step Finance Limited (FSF), ( also known as 1ststepfinance ) a large debt management company based in Stockport, can no longer trade in any business requiring a credit licence after the OFT identified serious concerns about the transparency and integrity of its practices.
The OFT made a decision to revoke FSF's licence in November 2012 after finding that among other things, FSF's advertising, marketing and other information failed adequately to highlight the risks or costs associated with using its services.
FSF made, but then withdrew, an appeal against this decision, following which the OFT authorised it to trade for a short period, subject to strict conditions to protect consumers, so it could wind down or transfer its business. This period has now passed and FSF's consumer credit business has been transferred to another business.
Welcome Solutions Ltd (WSL), a Lancashire-based debt management company, has had its credit licence revoked after it too withdrew its appeal against an OFT decision to refuse to renew its licence. The OFT found that WSL, which traded as 'debtsorters.co.uk', had engaged in unfair or improper business practices, including falsely claiming or implying that its debt advice was provided on a free and impartial basis, and also publishing misleading or false customer testimonials.
Another OFT decision not to renew a licence of a debt management firm has also been upheld at appeal. Manchester-based Debt Connect (UK) Limited (DCL) was found to have engaged in a number of unfair business practices, including providing misleading and inaccurate information to consumers and failing to implement proper practices and procedures.
In upholding the OFT's decision, the First Tier (Consumer Credit) Tribunal concluded that Mr Sharma, the Managing Director and compliance officer of DCL, has 'insufficient skill, knowledge and experience to enable him to guide DCL and its employees through the requirements they must meet in order to discharge their responsibilities as a consumer credit licence holder operating in an area with a high risk of consumer detriment'.
Since the OFT's 2010 review of the debt management sector, over 100 businesses have exited the market or been refused licences to enter the sector.
David Fisher, OFT Senior Director of Consumer Credit, said:
'We have been tackling bad practices in the debt management sector as a priority since our report in 2010 showed widespread breaches of credit guidance that were causing distress to people already in financial difficulty. These results are the latest in our continuing efforts to improve practices across this sector.
'We expect businesses in the debt management sector to behave with integrity and treat their customers fairly. They must be transparent about the service they are selling, making clear to prospective customers the costs they will incur and the risks they take. We will not hesitate to revoke the licences of debt management businesses that fail to do so.'
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The OFT has removed the licences of three debt management businesses.
First Step Finance Limited (FSF), ( also known as 1ststepfinance ) a large debt management company based in Stockport, can no longer trade in any business requiring a credit licence after the OFT identified serious concerns about the transparency and integrity of its practices.
The OFT made a decision to revoke FSF's licence in November 2012 after finding that among other things, FSF's advertising, marketing and other information failed adequately to highlight the risks or costs associated with using its services.
FSF made, but then withdrew, an appeal against this decision, following which the OFT authorised it to trade for a short period, subject to strict conditions to protect consumers, so it could wind down or transfer its business. This period has now passed and FSF's consumer credit business has been transferred to another business.
Welcome Solutions Ltd (WSL), a Lancashire-based debt management company, has had its credit licence revoked after it too withdrew its appeal against an OFT decision to refuse to renew its licence. The OFT found that WSL, which traded as 'debtsorters.co.uk', had engaged in unfair or improper business practices, including falsely claiming or implying that its debt advice was provided on a free and impartial basis, and also publishing misleading or false customer testimonials.
Another OFT decision not to renew a licence of a debt management firm has also been upheld at appeal. Manchester-based Debt Connect (UK) Limited (DCL) was found to have engaged in a number of unfair business practices, including providing misleading and inaccurate information to consumers and failing to implement proper practices and procedures.
In upholding the OFT's decision, the First Tier (Consumer Credit) Tribunal concluded that Mr Sharma, the Managing Director and compliance officer of DCL, has 'insufficient skill, knowledge and experience to enable him to guide DCL and its employees through the requirements they must meet in order to discharge their responsibilities as a consumer credit licence holder operating in an area with a high risk of consumer detriment'.
Since the OFT's 2010 review of the debt management sector, over 100 businesses have exited the market or been refused licences to enter the sector.
David Fisher, OFT Senior Director of Consumer Credit, said:
'We have been tackling bad practices in the debt management sector as a priority since our report in 2010 showed widespread breaches of credit guidance that were causing distress to people already in financial difficulty. These results are the latest in our continuing efforts to improve practices across this sector.
'We expect businesses in the debt management sector to behave with integrity and treat their customers fairly. They must be transparent about the service they are selling, making clear to prospective customers the costs they will incur and the risks they take. We will not hesitate to revoke the licences of debt management businesses that fail to do so.'
NOTES
- FSF can no longer trade in any business requiring a credit licence after 18 October 2013.
- FSF discontinued its appeal against the OFT's decision to revoke its licence in June 2013.
- The conditions FSF could continue to trade under are available on the Consumer Credit Public Register (Credit licence number: 610509).
- DCL has until 11 November to appeal the Tribunal's decision.
- In the same action as DCL, the OFT also revoked the associated licence of claims management company, Connected Claims Limited.
- The Consumer Credit Act 1974 requires businesses that offer goods or services on credit, or lend money, or are involved in activities relating to credit or hire, to be licensed by the OFT. The OFT has a statutory duty under the Act to administer the consumer credit licensing regime, and must be satisfied that a licensee is fit to hold a consumer credit licence. Trading without a licence in such cases is a criminal offence and can result in a fine and/or imprisonment.
- The OFT's consumer credit team currently has 30 'own initiative' investigations open, including 10 into debt management firms.
- The Financial Conduct Authority (FCA) will take over regulation of consumer credit from the OFT on 1 April 2014. The transfer of regulation is part of the Government's programme of regulatory changes for financial services and brings conduct of business regulation under a single financial services regulator. See the FCA's website for more information.
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