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Tuesday, 13 September 2011

When is a business fit to have a consumer credit licence?

The Office of Fair Trading has drawn attention to what makes someone fit to hold a consumer credit licence, after the Consumer Credit Appeals Tribunal rejected an appeal by a company which had had its licence revoked. The appeal decision is here and the OFT's press release is here. Although the company in question was a debt collection agency, the same principles could apply to other businesses that need licences.

The OFT points out that the decision highlights the need for credit businesses to check that when communicating with their customers they are clear and transparent and do not place undue pressure on the debtor. The Tribunal considered in particular that the company was not fit to hold a licence because:

  • It  lacked sufficient skills, knowledge and experience to operate a consumer debt collection business.
  • It did not have practices or procedures to deal fairly and properly with consumers.
  • The payment demand letter was designed to look like an official or legal document, against OFT guidance.
  • The managing director described himself to debtors as a lawyer, which was intended to create a misleading impression.
  • The company was persistently obstructive in dealing with enquiries from the OFT and Trading Standards.
None of which is very reassuring in the light of the reorganisation of the apparatus of consumer protection and the abolition of the OFT.

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