By Marcus Leach
The Office of Fair Trading (OFT) is consulting on new rules that will force companies offering debt management services to abide to far stricter regulations, or risk being closed down.
The new rules will be a lot stricter as OFT looks to ensure such firms treat their clients fairly, stating very clearly what services they offer and exactly how much they will charge.
All firms will be forced to stop using misleading names or adverts, as well as ensuring that any advice given is in the customer's best interests.
must be in the client's best interests.
"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," David Fisher, a director of the OFT, said.
"The failings identified by our recent review are unacceptable and show that debt management businesses must raise their standards or face enforcement action."
An eleven month investigation in September 2010 by OFT found that the industry was riddled with misleading adverts and poor advice to clients. On the back of that OFT threatened to close 129 firms.
"Firms are not giving the advice or offering the solution that is in the best interests of the consumer, but instead that which is most profitable to them," it said.