§ Paul FlynnTo ask the Secretary of State for Trade and Industry (1) what measures she plans to introduce to ensure good practice among debt management companies; [91833]
366W(2) what assessment she has made of the Office of Fair Trade's guidance for debt management companies and the level of protection they offer to consumers. [91834]
§ Miss Melanie JohnsonCompanies providing debt management services, whether they charge or not, are required to be licensed under the Consumer Credit Act 1974. Under the Act the Director General of Fair Trading (DGFT) has a duty to ensure applicants for a licence are fit to engage in the activities for which they are licensed.
In December 2001 the DGFT issued guidelines to debt management companies to ensure they deal fairly and openly with consumers—the Debt Management Guidance (December 2001). A copy of the guidance can be found in the Libraries of the House.
The guidance requires that companies offering debt management services should comply with the best practice identified in it. Where the Office of Fair Trading (OFT) has evidence of practices breaching the guidelines the DGFT can take action to refuse or revoke the consumer credit licence, or take such other action as appropriate under other legislation (e.g. Unfair Terms in Consumer Contracts Regulations etc).
I am satisfied that the guidance ensures consumers a good level of protection; and I am looking forward with interest to the results of the Compliance Review which the OFT is currently undertaking.