DAMMING REPORT FROM THE OFFICE OF FAIR TRADING

[kallis3]

Hopefully you are wrong.

[Adam Davies]

Hi
I agree that the way it has been presented has been wrong. A great story for the media and great promotion for the free sector.

Andrew..do you know if all debt management companies were mystery shopped ? The 8% that were seen to be complying will they ever know ?

Regards

[Broke of London]

I think if anyone has concerns about the way their company sold the IVA/ DMP or thinks their case is being poorly managed, then surely the best thing to do is ASK THEM OUTRIGHT if they were one of the companies listed in the report. This also goes for people thinking of approaching companies about a debt solution.

I'm sure the report does not put an onus on them to disclose this information, but equally they would'nt be able to lie or not answer.

[kallis3]

I very much doubt if you would be told if they were one of the companies. You deal with the monkey, not the organ grinder!

I doubt if the office staff would have a clue!

[Broke of London]

They would have to give you the correct answer even if it meant going away to ask the boss otherwise they are mis-representing themselves. Particularly in the case of new clients, this would call into question the legality of the contract and possibly frustrate (is that the word?) the IVA. It would also be anther black mark from the OFT.

[size5]

I very much doubt if all companies were mystery shopped. I also doubt very much whether ANY free organisations, one hesitates to call them charities, were mystery shopped at all. Latest estimates indicate that there may be up to 800 companies offering a DMP/IVA service. 129/800 is less than 1 in 6, which suddenly doesn't make such a good headline....

Regards.

[Andrew Graveson]

My understanding is that it was a fairly major task in itself to try to draw up a list of the debt management plan companies operating in the UK for the review.

I think it's inevitable that many debt management plan companies were overlooked for this list. Size5's estimate of the size of the industry rather backs this up.

They therefore would not have been subject to visits and mystery shopping and so on. At least not this time.

[MelanieGiles]

Surely this information is available from the OFT - given that they issue all CCLs?

[Andrew Graveson]

It used to be that when applying for CCL's people/companies would look to add all of the available categories to their licence "just in case".

That's been stopped now as certain activities, including debt advice, are defined as being high-risk and require much a more thorough application and assessment as a result.

However I would guess that there will be many many thousands of persons and companies who retain the right to provide debt advice on older consumer credit licences, most of whom probably do not.

[MelanieGiles]

Do they still have to go through a renewal process every five years?

[Andrew Graveson]

Hi Melanie,

My understanding is as follows:

The old licences lasted five years. When they expire anyone wanting to keep a high-risk category on their licence will need to go through the thorough high-risk application process.

Provided you are successful in getting this authorisation the new licence is permanent (i.e. not subject to renewal every five years) provided that you meet the standards set by the OFT of course.

So this is all being rather phased in but, over time, the number of CCL's which allow debt advice and/or debt management should decline significantly.

[MelanieGiles]

OK - so as licensed insolvency practitioner, I am subject to a relatively rigourous external review of my systems and processes every three years. If there is to be no renewal requirement for existing licenses - once the five years has run out and a lifetime license granted - how do the OFT intend to address the current problem with the degree of inappropriate advice and practice in this industry sector?

And do you think that insolvency practitioners should also have an OFT approced CCL alongside their insolvency licence?

[Andrew Graveson]

Members of trade associations (DEMSA and the DRF) will be subject to ongoing inpsection.
I suspect that non-members may be monitored more closely by the OFT and Trading Standards than previously.

I think your second question might be better answered by the OFT than myself Melanie!

[Peer Lawther]

Hi there, I'm Peer, the new Social Media team leader at CCCS.

I thought I should respond to Michael Peoples' and Mike Morgan's concerns, whether free charities were audited by OFT in their investigation.

CCCS and CCCS Scotland were fully audited as part of the OFT scrutiny (using the same criteria as it used for fee charging companies) and we're happy to say that we came out with a completely clean bill of health.

Additionally, from reading the OFT report, it seems two other free debt charities were audited (it mentions four in total but obviously we were counted as two of those) so it wasn't just fee-charging companies that were audited.

I hope that clarifies things.

[Michael Peoples]

Thank you Peer for letting us know that and welcome to the Forum. It is always good to have a new poster and your input would be appreciated if you stay around.