New guidelines have been drawn up by the Office…
New guidelines have been drawn up by the Office of Fair Trading (OFT) to ensure debt management firms offer the best possible service.
The OFT guidance provides for a number of standards, including maximum transparency over what is involved in the service and any fees charged.
Consumers should also be told of the risk and benefits of the proposed solution and give advice in the best interest of customers.
The code also cracks down on the use of misleading advertising tactics and has been produced with the aim of allowing customers to make the best-informed choices possible when seeking solutions to personal debt problems.
Consumers may now feel more confident about such services because the OFT has been acting against rogues since completing a compliance review in September last year, warning 129 firms and revoking 43 trading licences.
Director of the OFT's consumer credit group David Fisher said: "This guidance is designed to leave firms in no doubt about the standards the OFT expects and what they must do to comply with the law. The failings identified by our recent review are unacceptable and show that debt management businesses must raise their standards or face enforcement action."
Examples of misleading advice may include claims that taking out individual voluntary arrangements (IVAs) can lead to a reduction of debts by as much as 75 per cent.
Earlier this week, media officer for the Money Advice Trust Paul Crayston said it is rare for an IVA to lower the amount owed by that much.
Posted by Paul Thacker