At last the reasons why people get into debt are being taken seriously as well as the commercial factors that make the situation worse. Debt was also the subject of National Consumer Week, though this special week may have passed you by. As mentioned briefly in the last issue of Consumer News, The Office of Fair Trading has offered new guidance to tackle bad practice by debt management companies. These usually suggest putting all the victim's debts together and taking over their administration. Besides the additional fees, too often the debts themselves do not get paid off, making the situation even worse. The problem is enormous: it has rocketed by over a third in the last four years. The Citizens' Advice Bureaux deal with over a million enquirers a year, half of whom have borrowed more in attempts to control their debt problems. Several other organisations are also trying to cope with advice on a national basis. One of these is the charity Credit Action Helpline on 0800 591 084, which also has a list of their own helpful publications.
The Government has announced a review of the Consumer Credit Act. At present when issuing a credit licence the Office of Fair Trading looks for criminal convictions, makes a check with Trading Standards Departments and the courts and, if all appears well, will issue the licence. The Act does not impose a test of competence. One way the OFT is working is by the issue of Guidance Notes. Following those on debt management, there will be others dealing with used car dealers, debt collection practices and credit brokerage. These will give a clear indication of what is required and if the guidance is ignored then action will be taken under the Consumer Credit Act. The guidance notes will be used as evidence to be put to the Adjudication Officer who can recommend removal of a credit licence. The size of the regulatory problem can be judged by the fact that 30 UK credit card companies together issue 1300 different credit cards. The number of firms offering other forms of finance is truly staggering.
This is the way the Financial Services and Markets Act, which came into force on 30th November 2000, has been described. The main effect will be the bringing together of the various regulatory bodies which formerly controlled the financial sector. It will control around 217,000 authorised financial services personnel in some 10,800 firms. There is concern that many of these firms may have little understanding about the details required from them under the Act and the ways in which they will be required to conduct their business. More controversial is the immunity from legal action of the FSA should it make errors in its judgements, but this will allow it to carry out its policing more rapidly and unhindered by awaiting the results of legal proceedings.
How long must you give an insurance company or a bank to remedy a complain before you can take it to the Ombudsman' The financial ombudsman guidelines merely suggested you should give the firm time to complete its investigations. Now they have to work to an eight week rule on complaints. During this time they must either reach a decision or give a reason for the delay, for example that they are waiting for further information. Even then the complainant can go to the Ombudsman after the completion of the
eight weeks, though it seems sensible to give the firm a written warning limiting any further delay to two or three weeks if their reasoning seems justified. The rule originated with the Personal Investment Authority and included life assurance, pension and unit trust companies but now applies to all financial firms including the banks, building societies and general insurance companies. See Financial Ombudsman News elsewhere in this issue.
The success of the EU discount grocers, who can buy from continental sources, in keeping their prices down in the UK does suggest that manufacturers still have too much control on the minimum prices they allow supermarkets and other outlets to charge. The Office of Fair Trading has set up a new Markets and Policy Initiatives division. It will first look at Internet services, pharmacies and extended warranties, exploring how well markets are working for their customers and reporting how these could work better. The OFT states "no one is in the dock - though if a study reveals the need for further investigation or action under any of our enforcement powers, we will act accordingly". It looks as if the large international corporations which restrict supermarkets from buying on the open market will not be tackled.
One of the original definitions of a motor caravan was that it had both cooking and washing facilities. Now, in a case before the House of Lords, it has been decided that 'a dwelling within the meaning of Section 1(1) of the Housing Act 1988 is a place where a person lives, treating it as a home'. There is no requirement that cooking facilities have to be available. The case concerned the repossession of a room in a London hotel where it was decided that the long-term tenant was entitled to an assured tenancy under the 1988 Act despite there being no fixed cooking facilities, just a bed, some furniture and a wash basin. However, a power point allowed the use of a toasted sandwich maker, a kettle and a warming plate to reheat ready cooked food. The possible use of a microwave oven does not appear to have been considered.
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