Debt management or helpline?


In a press release on 2 December 2010 the Office of Fair Trading told us of its work in stopping us being mised by company names.

The OFT is reminding debt management companies that they must not use misleading trading names and must make clear that they are commercial enterprises rather than charities or government services.

The reminder follows action by the OFT to refuse an application from Baker Evans Ltd to use the trading names ‘The Bankruptcy Helpline’ and ‘The Insolvency Helpline’. Baker Evans Ltd has the right to appeal this decision to the First-tier Tribunal.

The OFT refused to authorise the use of these names because they could potentially mislead consumers into thinking they are dealing with an impartial, non-commercial or governmental organisations, rather than a commercial enterprise. Consumers need to be able to differentiate between the two.

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

‘Consumers must be able to distinguish commercial debt management companies from free charitable or government services. We will not agree to names that could mislead consumers into contacting companies when they might think that they are accessing free advice.’

Extra information:

1. The OFT refused to vary Baker Evans Ltd’s consumer credit licence to add the new trading names referred to above. The OFT’s action was not a censure of Baker Evans Ltd in respect of the existing trading names which it is permitted to use under the terms of its licence or of its conduct.
2. Baker Evans Ltd can appeal the OFT’s decision to the First-tier Tribunal and has until 22 December 2010 to do so.
3. Traders who wish to operate in the debt management sector must hold an appropriate consumer credit licence. Any names, including web addresses, they wish to trade under must be included on the licence.
4. The consumer credit licensing regime was set up by the Consumer Credit Act 1974 (the Act) to protect the interests of consumers. The OFT has a duty under section 25(1AD) of the Act to ensure that only those trading names which the OFT is satisfied are not misleading or otherwise undesirable are issued.
5. Consumers considering using debt management services can contact for information about free advice.

There is alot of information out there but it is still easy to be caught out. Let us know your experience.