The Office of Fair Trading (OFT) is calling on businesses to take the necessary steps to be ready for changes to the consumer credit licensing regime that come into force in the autumn. From 1 October 2008, businesses offering debt administration or credit information services (which may include credit repair) will need to be appropriately licensed by the OFT.
The new debt administration license category is required by those businesses wishing to administer debts under consumer credit or consumer hire agreements on behalf of the creditor.

There are also three new categories available to those wishing to provide credit information services and businesses need to ensure that they select the correct category.

The new categories apply to businesses wishing to:

* obtain information from credit reference agencies on behalf of other people, offer advice about the information obtained and to be able to secure corrections or amendments to such information, on a commercial basis,

* obtain information from credit reference agencies on behalf of other people and offer advice about the information obtained on a commercial basis, but without being able to secure corrections or amendments to such information, and

* obtain information from credit reference agencies on behalf of other people, offer advice about the information obtained and to be able to secure corrections or amendments to such information, but providing these services on a non-commercial basis only.

The OFT considers aspects of both debt administration and credit information services, in particular credit repair services offered on a ‘commercial’ basis, to constitute high risk credit activities.

Consequently, businesses applying for these license categories are likely to be subject to additional scrutiny at the application stage and may be subject to on-site inspections to assess their competence to engage in these activities.

Any business carrying out these activities from 1 October onwards, without an appropriate license, is likely to be committing a criminal offense and could face prosecution. Businesses are encouraged to apply early for any new license categories they may need in order to ensure that their applications can be processed before the 1 October deadline.

David Philpott, OFT Deputy Director of Consumer Credit, said ‘the requirement for businesses that wish to provide these services to be licensed by the OFT is an important part of the Government’s reforms to further strengthen the regulation of credit markets. Businesses wishing to provide these services from 1 October onwards will need to satisfy the OFT that they are fit to do so.’

Source: OFT

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