Less complaints about debt firms

Complaints are down against debt management companies

Complaints about debt management firms have fallen by 70%, according to the Office of Fair Trading.

They fell from 217 between March 2001 and December 2001, to just 65 between October 2002 and July 2003, it said.

The body, which produced new guidance for the industry in December 2001, said the number of complaints had now fallen to just one or two a month.

Yet it cautioned that some difficulties still existed, particularly regarding some companies' advertisements.

The Office of Fair Trading (OFT) recognised three areas of concern:

• Failure to make clear that lower monthly payments will usually lead to an increase in the size of the sum to be repaid.
• Misleading claims such as 'debts can be written off', when companies cannot guarantee such outcomes.
• Warnings not being given sufficient prominence.

John Vickers, chairman of the Office of Fair Trading (OFT), said it would continue to look closely at the industry.

Best interests

"Consumers considering using a debt management company are usually in serious financial difficulty, so it is essential that debt management companies act in their best interests," he said.

Mr Vickers added: "Following the OFT guidance, business compliance is up and consumer complaints are down, which is good news for consumers. However, more needs doing and we will continue to watch the industry carefully."

Under the Consumer Credit Act, firms require a consumer credit licence from the OFT if they wish to offer debt management services.

The OFT has warned the industry that breaches of its guidance could result in licences being revoked.