Debt Management Industry Prepares for New Regulation
The Debt management industry is facing new regulation expected to come from the Ministry of the Justice. The usual financial watchdog of the UK government the Financial Services Authority is occupied examining the results of the credit crunch and investigating the banking sector in greater detail, so many industry experts now believe the ministry of justice will be positioned to regulate the Debt Industry for the near future.
The numbers of operating debt management companies have increased greatly over the last 18 months, with numbers increasing from 1000 companies to over 3000 presently estimated. Some companies have chosen to go through self regulation; the majority are unregulated unlike insolvency practitioners who are strongly regulated in their processing of IVA’s.
One of the self regulation bodies of the debt industry is the DRF(Debt Resolution forum). This comprises of over 25 of the most influential companies. The DRF has taken measures to allow the debt management industry to self regulate, before legally required to do so by the MOJ.
The DRF is committed to adopting professional standards across the debt advice industry in which all its members are fully committed to. They believe any debt resolution provided must be appropriate for the position and needs of the debtor, should take into consideration the needs of the creditors and should be clearly in the best interest of all parties.
Debt Resolution Forum members have take a number of steps to improve the quality standards which can be provided to clients, Debt Release Direct who are one of the leading members of DRF has taken the unprecedented step of making the commitment that all its debt advisors will be have passed the Certificate of Debt Resolution in the next 12 months, which the DRF has stated “is tangible evidence of DRF’s commitment to professional standards”. Debt Release Direct will be the first debt management company to commit to achieve this professional standard.
It is still in the balance if the ministry of justice will take the self regulation of the DRF into consideration, or they will seek to regulate the debt management industry in a different way. Many industry insiders believe this is the most likely outcome, but only time will tell.
