The Office of Fair Trading has recently issued a warning to debt management firms saying that they should not be sending marketing messages through e-mail, telephone or text message to potential customers. This warning has been issued to around 130 businesses all of whom are operating in the commercial debt sector.
The OFT have also stated that these companies are not allowed to offer their staff financial incentives for selling people debt management solutions. The OFT have said that they are not allowing this kind of incentive for staff because it can lead to them miss-selling solutions or offering customers advice that is not suited to them.
These rules have been issued after the regulator completed a study in 2010 which showed that there were serious concerns about marketing and advertising in the sector. These were mostly about the kind of advice that was being offered as it was not always deemed appropriate for a customer. The companies have been warned that if they continue with these practices then they are going to risk losing their licences to deal with credit issues.
These organisations have also been told that if the customer needs advice they are to give them the option of being forwarded to a non-profit advice centre. They have said that there should be much more transparency in the industry in order to reduce the number of complaints that have been made against the sector. Last year the number of complaints being made rose by around 20 percent and of all the complaints over 50 percent were found to be in favour of the customer.
The director of the relevant sector of OFT has stated, “We have set out important new standards for these businesses to follow. It will help customers who could be potentially exploited by these companies and encourage better practice in the industry.”