Skill and fairness.

10) The purpose of this guidance is to set out minimum standards to be met by DMCs if they are to be judged fit to hold a consumer credit licence. The guidance does not, however, set out a comprehensive checklist. Not all of its elements will apply to every DMC, it is not exhaustive and conduct or omissions not included in the guidance may be taken into account by the OFT in determining fitness. DMCs are expected to abide by the spirit as well as the letter of the Guidance.

11) Some of the practices highlighted here are clearly unfair or improper and in those cases DMCs should have been aware even before the issue of this Guidance of the risk of licensing action if they engaged in such practices or allowed their employees, agents or associates to do so. In other cases the position might have been less clear, and this Guidance is intended to be helpfulin outlining the kinds of business practice to which the OFT is likely to object.

DMC acting as an agent for a consumer debtor

12) During the consultation on this guidance the OFT has been told that some creditors have a blanket policy of refusing to enter into negotiations with some DMCs or even refusing to accept payments sent by DMCs on behalf of consumers. The OFT is concerned at these reports, especially those suggesting payments are refused.

13) Where a consumer appoints a representative to negotiate on their behalf, it is an unfair and improper business practice on the part of the creditor to operate a policy, without reason, of refusing to consider such requests.

14) Where a creditor wishes to refuse to negotiate with a particular representative, it must make its position known to the representative and also immediately inform any consumer on whose behalf the creditor is approached by that representative.

15) Where payments are tendered not by the debtor personally but by someone acting on his/her behalf, it is a principle of law that creditors cannot refuse to accept those payments. The practice of creditors returning payments, or not crediting payments to consumers’ accounts, purely because they are received through a DMC, therefore, is not acceptable and is a matter which the Office regards as seriously detrimental to the fitness of the creditor. This is so even in circumstances where a creditor has indicated that it will not negotiate with a DMC acting as a representative of a debtor.

16) It has also emerged in the consultation that some lenders and credit brokers refer consumers to DMCs as potential clients. There is no objection to this provided it is done with the informed, prior consent of the consumer. Referrals made without this consent will affect the fitness of the lender or credit broker.

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