By Claire West
Wilkinson today warns that the Office of Fair Trading has given its most clear indicator yet that it is deadly serious in its efforts to reform retail Credit Markets. This could have serious implications for those (Debt Management firms|http://www.compliancy-services.co.uk/oft.htm) that do not take immediate precautions.
The (OFT|http://www.compliancy-services.co.uk/oft.htm) has already taken enforcement action against 37 firms between April 2008 and June 2010, including revoking six established businesses licenses, and refusing seven new applicants. Additionally a further 129 have been told to improve their Compliance within three months or face further action.
On 28th September the OFT released its long awaited report into the (Debt Management sector|http://www.compliancy-services.co.uk/oft.htm) with damning verdicts into important working practices. Amongst a raft of criticisms it warned of widespread non-compliance with the (OFT’s Debt Management Guidance|http://www.compliancy-services.co.uk/oft.htm), misleading advertising, incompetent frontline advisers and a lack of awareness of complaints procedures.
Part of the review included 148 visits to (Debt Management
companies|http://www.compliancy-services.co.uk/oft.htm) by Local Trading Standards officers with only 12 of those firms visited being assessed as compliant.
“It is not entirely surprising that such a level of non-compliance was found” explains Wilkinson. “Experience shows that all too often firms fail to comply with demanding compliance rules or Codes of Conduct until they are caught out by the regulator. Many firms simply are not aware that the OFT is serious about making firms compliant. I am concerned that some firms still have not heard the message and could face further action from the OFT.”
Wilkinson is particularly concerned with the capability of OFT regulated companies to achieve and maintain compliance.
“For small firms without a dedicated compliance resource, interpreting the OFT’s guidance and developing appropriate procedures, including implementing staff training programmes, will be very difficult. Even so, the purpose of the independent audit will be to identify the areas of weakness and recommend appropriate actions. Time will run out for many firms if they don’t take action now’’ says Wilkinson.
What will be of strongest concern to most (Debt Management
firms|http://www.compliancy-services.co.uk/oft.htm) is the tone if the OFT’s language, however.
“The OFT appears to be very serious. Having taken strong action against a number of firms, and initial warning action against a further 129, the OFT is committed to its programme of proactive enforcement. This is likely to
mean further censure and action against non-compliant firms. It seems entirely likely that many firms simply will not know how to go about implementing the required actions. Those that do not are likely to lose their licenses.”