The Office of Fair Trading (OFT) which governs the UK financial services market will be given additional powers from early in 2013.
The new powers supplied to the Office of Fair Trading will ensure they are able to act swiftly in detecting and stopping unregulated or rule breaking consumer credit licence holders.
These new powers have been granted to the OFT as fury grows from the general public and consumer groups that people are poorly protected from greedy and often financially damaging companies.
The present situation
Currently the OFT has the power to retract an organisations consumer credit licence however should a company decide to appeal the decision they are allowed to continue trading for up to two years while the investigation is completed.
The change in the law will help ensure unethical debt management companies and rogue payday loan organisations are closely monitored and stripped of their licence quicker. This ensures vulnerable consumers are protected.
However, the new regulations don’t simply stop at payday loan and debt management firms, they will encompass all organisations requiring a consumer credit licence to trade. This will include organisations who lend credit as well as those providing debt collection or debt advice services.
The credit lending organisation Yes Loans was up until March 2012 offering credit under their consumer credit licence. However, this licence has been suspended following claims the company were charging people up to £70 to apply for credit, which has been revealed they would never be able to obtain.
The company encouraged customers to borrow expensive short term loans instead of the products they originally asked for. Yes Loans also led consumers to believe they were providing the loans directly, whereas they were actually an intermediary.
A step in the right direction
This move is a step in the right direction in the fight to protect consumers.
Consumer Affairs Minister, Norman Lamb said “This move will put a stop to those companies who exploit vulnerable consumers whilst dragging matters through a slow legal process.
It will also give a boost to legitimate businesses, with the swift suspension of unscrupulous traders.”
At Debt Support Trust our charity debt advice is provided on an upfront and honest basis. Our role is to ensure you are fully aware of the debt advice options you have and provide you with any support you require. Our trained and friendly team can be telephoned on 0800 085 0226 or you can complete a debt analyser to obtain online debt advice.