Debt: Several Debt Management Companies Shut Down

Debt Management Firms Closed

Debt Management Firms Closed

The Office of Fair Trading (OFT) has closed down 62 debt management firms over the last year, in a move to enforce against “rogue operators”. Several companies charging fees have been revealed to have misled customers regarding charges. In addition some have given bad advice.

Other Regulations and Enforcements

Other debt management companies have been asked to stop calling customers or pretending to be charitable organizations. Last September, a warning was given to 129 companies, which were given time to fix the problems before some were closed down.

Debt management companies need to hold a license to help customers with significant debt issues, according to the Consumer Credit Act. The OFT closed 50 companies in January of 2011 and a further 12 since then. They have been closed by removal of licenses, refusal of licenses, or surrender of licenses to the OFT.

A spokesman for the OFT said in a statement, “The OFT continues to take enforcement action against debt management companies where we find evidence of wrongdoing. Lesser enforcement action has been taken by the OFT in respect of a further four license holders.”

Higher Standards

Rules have become much stricter recently, with companies not allowed to mislead customers using names, adverts, or advice. The OFT has left the companies without a doubt about their expectations and firms that do not abide by these expectations have been or will be shut down.

Companies are required to make clear their services and charges from the beginning and standards have been raised. The firms that were closed down were “not giving the advice or offering the solution that is in the best interests of the consumer, but instead that which is most profitable to them,” according to the September 2010 report, which had appeared after an investigation lasting nearly a year.

In addition, some companies that had been closed had been revealed to have been pretending to be charities, pretending to offer free services and then charging, or pretending to be members of the government. In addition, a select few were revealed last May to have been keeping some of the money supposedly given to creditors, leaving already struggling families in a worse position.

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