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People who are in severe financial difficulties may seek advice from a debt management business. Some are aggrieved to discover that the advice they have been given has been inappropriate, given their particular circumstances, and they have unexpectedly incurred fees that they cannot afford to pay.

The current legal position is that traders who wish to operate in the debt management sector must hold an appropriate consumer credit licence. The Consumer Credit Act 1974 places a duty on the Office of Fair Trading (OFT) to ensure that consumer credit licences are only given to and retained by those who are fit to hold them.

On 22 March 2012, the OFT published revised guidance on the standards it expects from businesses offering debt management advice or credit repair services to consumers. The guidance builds on enforcement action taken by the OFT following a compliance review of the sector in 2010, which identified widespread concerns, in particular, problems with advertising and marketing practices and the quality of advice given.

The purpose of this note is to provide an overview of the background too, and the main features of, the revised OFT guidance.

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