ClearDebt’s David Mond and Andrew Smith speak about the OFT’s new debt management guidance and what these changes will mean for the debt management industry.
Debt resolution company, ClearDebt, is pleased that the OFT’s new debt management guidance, published on Tuesday June 14th June is likely to outlaw “full and final settlement” schemes such as those run by companies like DCM Apex, whose clients ClearDebt has been working with since that company went into administration on 2 March 2011.
Commenting, ClearDebt CEO, David Mond, said:
The guidance makes completely clear that it is to apply to firms offering full and final settlements and also that only in exceptional circumstances will a firm be permitted to retain clients’ funds for more than five days. Further, the guidance stipulates that a company cannot hold on to monies that should be sent to creditors unless both debtors and creditors are made fully aware of the fact and it requires client monies to be protected if the company itself goes bust.
Had these arrangements been in place before, it’s likely that many clients of companies like DCM Apex would be much better off now than they are.
The OFT guidance imposes much more detailed requirements on debt solution companies than has been the case until now. ClearDebt believes that the guidelines may force many debt management companies to throw in the towel:
The cost of compliance – both in financial terms and in more onerous business processes – will go up sharply when these guidelines are enforced.
says ClearDebt director of marketing and external affairs, Andrew Smith:
Many of our competitors, especially those that rely on cold-called leads bought from third parties, will, we believe, find it difficult to sustain their business model under these new rules.