OFT refuses permission for broker to collect debts

The OFT has refused to extend a credit broker’s licence to allow him to collect debts.

James Davenport of Davenport Motors in Manchester, licensed by the OFT to offer credit brokerage services, recently applied to vary his licence to add debt collection.

While the OFT was satisfied that Mr Davenport was fit to engage in some credit activities, it was not satisfied that he had demonstrated the specialist skills, knowledge or experience to collect debts. The OFT considers that debt collection is a high-risk activity and those wishing to engage in this type of business must show that they have implemented, or are putting in place, practices and procedures necessary to meet minimum standards required by the OFT. Mr Davenport failed to demonstrate that he had the expertise needed and so his application was refused. This decision does not affect Mr Davenport’s ability to offer credit brokerage services.

Ray Watson, OFT Director of Consumer Credit, said:

‘Mr Davenport is considered to be fit and proper person to hold a licence allowing him to offer credit brokerage services. However, debt collection is an area where there is a potentially high risk of harm to consumers. Anyone who wants to collect debts legally is subject to a high level of scrutiny by the OFT and those that do not meet our minimum standards of competence are not allowed to engage in this practice.’

NOTES

    1. The Consumer Credit Act 1974 (the Act) requires most businesses that offer goods or services on credit or lend money or are involved in activities relating to credit or hire to be licensed by the OFT. The OFT can refuse or revoke a licence if it decides that a trader is not fit to hold one.

    2. Adjudicators issue and determine licensing notices under the Act. They do so on behalf of the OFT, but make individual and independent decisions on fitness based upon the contentions in a notice, the evidence attached to a notice and the representations of those to whom the notices are addressed. Representations may be made in writing and at an oral hearing.

    3. An adverse determination (a refusal to grant a licence or the revocation of an existing licence) can be appealed to the Consumer Credit Appeals Tribunal. In this case, the period in which an appeal could be made has now passed.

    4. The determination to refuse a variation of Davenport’s licence (number 608595) was published on 15 July 2009.

    5. Traders applying for high risk debt collection licence categories must also demonstrate that they are competent to engage in such and that they have procedures in place to ensure compliance with the various legislation and guidance, including the OFT’s debt collection guidance, which sets out minimum standards of behaviour expected of license holders engaging in this sector.

   6. The Consumer Credit Public Register is maintained by the OFT. The register documents traders that hold, or have applied for, a license and any action taken against them.