Posts for Tag: OFT

Response to the OFT Debt Management Guidance

The OFT (Office of Fair Trading) has invited responses from interested parties to the document, Debt management (and credit repair services) guidance of June 2011 consultation ending September  5th.

As per the scope of the consultation the document represents the OFT's draft guidance for all licensees engaged in the licensable activities of debt counselling and debt adjusting (where the debts arise under consumer credit or hire agreements).....It focuses on unfair and improper business practices for the purposes of section 25(2A)(e) of the Consumer Credit Act 1974 which, if engaged in, would call into question a person's fitness to retain or be granted a standard consumer credit licence or to operate under cover of a group licence. In addition, it provides a basis against which the OFT can undertake assessments of whether businesses have appropriate skills, knowledge, experience, business practices and procedures, to be licensed by the OFT to operate an ancillary credit business providing debt counselling, debt adjusting or credit information services.

Page 5 of the document available on the OFT website here, expands further: This consultation is aimed at all those with an interest in, or involved in, the provision of regulated debt counselling, debt adjusting and credit information services (including credit repair). This includes debt management companies, not-for-profit advice organisations, creditors and some lead generation and claims management companies......The consultation may also be of interest to trade associations, professional bodies, regulators, enforcement agencies, consumer organisations and credit reference agencies. 

In accordance with the consultation, I as Paul Gailey, in the capacity as a contracted marketing consultant to ClearDebt Ltd, a Consumer Credit License holder nº565479, hereby offer my formal response to the guidance as itemised below.

3.6 f. Examples of unfair or improper business practices with regards to lead generation and direct marketing include: claims or statements regarding 'status'. For example, operating websites which look like and/or are designed to look like the web-site of a charity or a government body.

I note the guidance cites the 2009 OFT press release about this subject.

The prevalence of decieving websites, false claims and incomplete debt management information has regretfully continued since 2009 and today still exists. Detection of existence of these sites is a simple exercise in conducting an internet search for popular debt management related terms. Attached is an image of a website, which I regard as in violation of the guidance contained in chapter 3 as a minimum.
I broadly welcome the guidance contained in chapter 3, especially with regards to lead generation activities and I am strongly supportive of the guidance sections 3.3, 3.4 and 3.6b.

Advertising and other communications
All marketing, advertising and promotion and other oral or written representations should be clear, accurate and truthful and should not mislead, either expressly or by implication or omission.
This guidance applies to all forms of marketing, advertising and promotion across all media 
types. This includes online marketing such as paid for/sponsored listings and advertisements on 
internet search engines, contextual advertising (targeted advertisements based on the content of 
websites on which the adverts appear) and all marketing content on paid-for and non-paid-for 
online space including new media such as social networking websites, forums and blogs.

I disagree with the statement in the guidance or omission in relation to all forms of marketing, in particular paid for listings, contextual advertisements and non-paid for online space.

I agree that representations should be clear, accurate and truthful and should not mislead however I disagree with the statement in relation to omission because not all forms of accepted marketing permit a full explanation of all the positive and negative aspects of offered debt resolutions.

For example, the display of advertising messages, particularly in online media is in some instances severely limited to short messages or limited display of characters and it is unworkable to expect licensee holders to convey extensive information in all paid and non paid spaces. I do believe licensee holders can abide by the guidance to avoid misleading consumers by explicitly displaying the providence of their advertisement and or displayed message with a further link and/or citation of company details.

By this I refer to the common practise of displaying either a profile link, company website link, company name, terms, contact details of the licensee holder in the communication. 

3.12 Examples of unfair or improper business practices include....
...b. falsely claiming or implying that help and debt advice is provided on a free, impartial or independent basis, where the provider has a profit-seeking incentive

I disagree with the guidance in terms of its definition of help and debt advice and usage of the term free whereby a commercial debt resolution company and licensee holder publishes considerable volumes of debt information for consumers that is free to access, as in no purchase or indeed contract is necessary to consult the information and that this information can be of help to the consumer.

Furthermore, usage of online tools - that contain and display caveats of accuracy - which capture user information and compute debt scenarios and financial options are a valid form of marketing communication.

3.12 f. I agree with the guidance and am strongly supportive that the guidance applies to both the private commercial and creditor funded organisations (i.e charity), whereby particularly in the case of the fees for an IVA (Individual Voluntary Agreement) to be arranged and implemented, that the fees are clearly stipulated and explained how the organisation receives it's fees.

3.13 Licensees who advertise or sell online or by email must comply with the Electronic Commerce (EC Directive) Regulations 2002. Before using internet based and social media  marketing, licensees should consider whether they can exercise adequate control over its content, whether it is an appropriate medium and whether the required information, warnings and caveats, can be included sufficiently prominently. The 
OFT considers that search engine sponsored links and online messaging forums which limit the number of characters are unlikely to be an appropriate means of providing consumers with sufficiently balanced 
and adequate information. 

I disagree with part of the statement above of 3.13. Exercising adequate control over its content. Marketing materials that are shared by consumers can rapidly gain a high number of advertising impacts when the sharing is viralized whereby the original producer of the content may no longer be able to exercise adequate control of it if the message is copied or modified by consumers.

I disagree with the guidance regarding whether it is an appropriate medium whereby social media marketing channels are an accepted mainstream form of communication. 
Recent information published by the Office for National Statistics, in the annual British Internet Habits shows that
  • in 2011, 57% of over-16s in the UK are using the internet for social networking, as opposed to 43% in 2010
  • Internet access from mobile devices is increasing substantially – 45% of UK adults accessing the Internet from mobile devices, up from 31% in 2010
  • 91% of 16-24 year olds use social media. Usage is high for the 25-34 year old (76%) and 35-44 year olds (58%)
I regard social media as a legitimate channel to communicate with users seeking information from debt management organisations.

With regards to the statement: and whether the required information, warnings and caveats, can be included sufficiently prominently I refer to my earlier statement that I agree debt management organisations can abide by the guidance to avoid misleading consumers by explicitly displaying the providence of their advertisement and/or displayed message with a further link and/or citation of company details. In the case of social media, this can be done typically via a biography or profile description, where a link to the company website can be clearly displayed.

With regards to providing consumers with sufficiently balanced and adequate information I believe social media channels can satisfy the need for balance and adequate information because the ability of the licensee holder to send a link in a short message, a tweet or an update to Facebook is possible.

I strongly agree with the guidance 3.14a and 3.14d

Whilst I agree with 3.14b however in exceptional circumstances whereby the licensee may still act in compliance with search engine guidelines to keyword bid in contextual advertising using another organisation's name, respecting trademark law, the licensee - without misleading the consumer - may require to do so. I would like to take this opportunity to stress that I believe it is inadvisable to keyword bid in contextual advertising with another organisations name as a routine matter.


The above consultation response was also sent by email to as agreed with OFT officer Aaron Berry of the Debt Management Team on September 5th.

The views expressed here are my personal views and do not necessarily reflect the views of ClearDebt Ltd, a wholly owned subsidiary of ClearDebt Group plc.

Paul Gailey is supplying this guidance consultation reponse in his capacity as a contracted consultant to ClearDebt Ltd, a debt management company of qualified debt advisors and licensed insolvency practitioners for individuals in debt principally seeking an IVA (Individual Voluntary Arrangement) or a debt management plan.