The Office of Fair Trading: OFT accepts undertakings from debt management firms to improve practices

OFT accepts undertakings from debt management firms to improve practices

 

31/09 13 March 2009

The OFT has accepted written undertakings from three West Yorkshire-based debt management companies that they will provide higher standards of debt management services to vulnerable consumers.

The companies from which the OFT has accepted these undertakings are:

 

• Buckley Stephens & Co Ltd, trading as Spectrum Financial Protection
  
• Pendragon Financial Services Ltd, trading as Spectrum Financial Protection and Spectrum Financial Solutions, and
  
• WKD UK Ltd, trading as Money Tailor.
  

Following complaints from consumers and consumer organisations the OFT considered that these companies were breaching key principles of the OFT's Debt Management Guidance, and issued notices to the companies that it was minded to revoke their credit licences. The complaints alleged that Buckley Stephens, Pendragon Financial Services and WKD had failed to provide debt management services with due care and skill, including not keeping clients informed of progress in negotiations with creditors, and failing to have adequate complaints procedures in place.

In response, all three companies and their controllers provided written undertakings that they would comply fully with the OFT's Debt Management Guidance including by:

 

• informing consumers of a creditor's decision on whether or not to accept a payment proposal within five working days of being informed of the decision, and
  
• dealing promptly with enquiries from creditors, as promised in customer literature provided to consumers.
  

All three companies have also undertaken to put in place effective and clear complaint handling procedures as required under the rules of the Financial Ombudsman Service.

Buckley Stephens and Pendragon Financial Services have committed not to take on any new debt management customers. WKD, trading as Money Tailor, will be offering debt management business to new customers and has undertaken to publish on its website a customer leaflet giving clear information about its debt management fees and services.

The companies will arrange for their compliance to be independently audited on an annual basis with the results submitted to West Yorkshire trading standards service for scrutiny. The companies, and their controllers, have undertaken to meet regularly with West Yorkshire trading standards to discuss any issues highlighted by the reports and any complaints received about their businesses.

Failure to adhere to these undertakings could lead the OFT to take action to revoke the companies' consumer credit licences.

Ray Watson, OFT Director of Consumer Credit, said:

'The matters covered by these undertakings are very serious and we will work closely with West Yorkshire trading standards to monitor their compliance. If we receive evidence of a possible breach of the undertakings, we will not hesitate to take further action.'

NOTES

1. The Consumer Credit Act 1974 (the Act) requires businesses that offer goods or services on credit and/or are involved in activities relating to credit or hire to be licensed by the OFT.

2. The OFT can refuse or revoke a licence if it decides that a trader is not fit to hold one.

3. The OFT issued guidance for providers of debt management services in 2001. The Debt Management Guidance sets out minimum standards of behaviour expected of licence holders who seek to re-schedule customers' repayment of debt and charge for doing so.

4. Written undertakings, provided by way of representations to an OFT adjudicator, are one of the enforcement tools available to the OFT. Non-compliance with undertakings may be taken into account by the OFT when considering fitness to hold a licence.

5. The fact that Buckley Stephens & Co Ltd, Pendragon Financial Services Ltd and WKD UK Ltd have given undertakings will appear on the consumer credit register.

Thanks for that sosumi