Provision of Credit Information Services to be licensed

Consumers who are thinking of paying for credit information services will have greater protection under new OFT licensing requirements coming into force on 1 October.

The changes mean that any business wishing to provide these services will need to hold an appropriate consumer credit licence. In order to be considered fit to hold such a licence, it will need to be able to demonstrate that it is not engaged in any unfair practices such as making misleading claims to consumers about the services it can provide, either in advertisements or via its website.

The OFT would have serious concerns about the fitness of any 'credit repair' businesses making misleading claims about when they can alter credit files or improve credit ratings. Consumers should be wary of any business making such claims since entries in a credit record, including county court judgements or Scottish decrees, can only be altered or removed if they are factually incorrect or have been discharged.

Under UK legislation, consumers can already access their own credit files from credit reference agencies, in order to check for themselves whether the information held is correct or needs updating, for a payment of only £2.

Ray Watson, OFT Director of Consumer Credit said: 'These further reforms to the licensing regime are important steps in protecting consumers, especially given the current economic climate where access to mainstream sources of credit may become more difficult - particularly for consumers with adverse credit ratings.

'Businesses should be aware that if they offer credit information services without holding an appropriate licence, they will be committing a criminal offence and risk prosecution, and that any agreements they enter into with consumers whilst unlicensed may be unenforceable.'