The consumer standards agency announced this morning that 35 debt management firms handed in their consumer credit licences and 15 or more are facing licensing action.
A further 79 firms have submitted evidence and have yet to be reviewed, with further licence withdrawals expected.
Today’s enforcement announcement follows an OFT warning to 129 firms in September 2010, after its review of the debt management sector found widespread compliance problems.
Ray Watson, director of the OFT’s Consumer Credit Group, said: “We are determined to improve standards in this sector, as the failings identified by our review are unacceptable. Companies providing debt management services should be in no doubt that we will act against bad practice and ensure consumers are protected.”
The British Banker’s Association (BBA) also called for clearer and more consistent debt advice to help Britons struggling under financial pressure today.
A joint report by the BBA and Accenture said that a clearer range of options for employed people to resolve their debt would avoid confusion and worry.
They called for greater consistency in the way debt advice is provided and how creditors deal with customers in financial difficulties.
The report recommends changes in four key areas, including: the creation of a single body to regulate debt advice, better use of customer information to identify people at risk of losing control of their debts, increased emphasis on early intervention and improving customers’ financial education.
Paul Ross, BBA policy director, said: “We want to unravel the red tape to bring about a more financially responsible solution for customers.
“Customers are currently faced with too many confusing options for resolving their debt, and may set out too early on expensive legal procedures when a more common sense approach would be better for everyone.”
David Parker, senior executive at Accenture added that, as the UK government considers credit regulation, more needs to be done to ensure that there are safety nets in place for consumers in financial distress.
“The changes we are proposing will have a fundamental impact on the way debt is managed through the rehabilitation of debtors and the prevention of new or repeated debt behaviour.
“However, agreement to implement a new debt management framework must be reached by all relevant stakeholders, including the government, regulatory and advice bodies, as well as lenders and borrowers,” he explained.
Earlier this month, Scottish Provident revealed in its financial safety report that Britons only see themselves in serious financial difficulty once they have more than £15,000 of unsecured debt.
