Debt management – cold calling


Office of Fair Trading crackdown on illegal cold-calling

 2 November 2010 Press release from OFT

The OFT has taken action against lead generation firm Compensation Professionals Network Ltd (CPN) as part of a crackdown on illegal cold-calling practices in the debt management sector. As a result, CPN no longer holds a consumer credit licence.

Lead generation firms source information from people looking for debt help or loans and sell this data on to other businesses such as debt management firms.

The OFT took action against CPN to prevent unfair and improper business practices including the sending of automated messages without consent, implying that calls were made on behalf of the government, misleading consumers by claiming to be able to write-off consumer debts and claiming that these services were free.

The action against CPN follows a previous OFT warning to the debt management industry to stop using unsolicited and misleading cold-calling practices to generate client leads.

The OFT is working with the debt management industry trade associations Debt Managers Standards Association (DEMSA) and Debt Resolution Forum (DRF) to warn member debt management firms that they should only use licensed lead generation firms and that failure to do so could lead to licensing action. This will be reflected in the OFT’s revised Debt Management Guidance due to be published for consultation next year.

Ray Watson, Director of the OFT’s Consumer Credit Group, said:

‘Misleading or improper lead generation and cold-calling can be a real nuisance and cause problems for consumers. The OFT has taken action against CPN to safeguard the interests of consumers. Debt management companies should take care to only deal with reputable lead generators that are licensed by the OFT. Failure to do so will put the companies themselves at risk of enforcement action.’

The OFT has worked closely with the Information Commissioner’s Office, which is the lead enforcer on cold-calling. David Smith, Deputy Commissioner and Director of Data Protection at the Information Commissioner’s Office (ICO) said:

‘We welcome the OFT’s action against CPN. Automated calls promoting debt solutions cause real annoyance and anxiety to individuals. We will continue to work together with the OFT to crack down on these harmful practices.’

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