Debt trade association gets OFT code approval

The Debt Managers Standards Association (DEMSA) has become the first trade body within the debt management industry to successfully secure approval for its code of practice under the OFT Consumer Codes Approval Scheme (CCAS).

Debt management companies act on behalf of consumers to help clear outstanding debts by negotiating with creditors and facilitating repayments. In return for their services, these companies are generally paid a fee by the customer.

DEMSA currently has four members, who between them deal with around 38 per cent of all fee-paying debt management cases handled in the UK.

Consumers using companies that are members of DEMSA are guaranteed a better standard of customer service than the law requires. The OFT only approves codes that have proved effective in safeguarding and promoting the interests of consumers beyond the basic requirements of the law. These companies have agreed to :

a set of comprehensive monitoring procedures including inspection visits, monitoring of telesales with potential customers, checks on marketing, advertising and web sweeps,

an independent disciplinary panel to ensure that the code is complied with and enforced,

a range of sanctions including warnings and ultimately termination of membership for dealing with non-compliance,

protection of all clients deposits or prepayments by the use of separate ring-fenced accounts,

an obligation that they will use fair terms and conditions and provide clear written pre-contractual information for customers,

regular customer satisfaction surveys so that problem areas can be identified and addressed so that the code can be developed and improved for the benefit of consumers.

Consumers wanting to use a DEMSA member can now look for the OFT Code Approved logo on company advertising and literature.

John Fingleton, OFT Chief Executive said : 'DEMSA has undertaken a rigorous assessment to achieve OFT Code Approval, and I congratulate them on their work to improve standards for consumers using their services. Consumers can be confident that where they see the OFT Approved Code logo they will be treated fairly, and that an effective redress scheme is available if this is not the case.'

Michael Land, DEMSA Chairman said :'We are delighted to have achieved OFT code approval after working closely with the OFT and members to ensure the highest standards for consumers. We are especially pleased to have become only one of eight trade bodies to currently have gained this approval.

'It is now even more important, with so many people needing expert debt advice and help, to be totally confident when dealing with our members. DEMSA expects that several more debt management companies will be joining as members after they have passed the rigorous DEMSA requirements.'