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DEMSA strongly condemns the malpractice uncovered by BBC investigation into debt management companies

May 31, 2011 Comments Off on DEMSA strongly condemns the malpractice uncovered by BBC investigation into debt management companies

Following the news that some debt management companies have been holding on to clients’ money rather than paying it to creditors, Michael Land, Chairman of the Debt Managers Standards Association (DEMSA), said: “DEMSA condemns in the strongest terms these completely unacceptable practices and we support the OFT in taking tough action against these rogue firms in the debt settlement industry.”

Under the terms of the OFT debt management guidance notes, any monies held on behalf of consumers must be kept in a client account not usable by the firm for the purposes of its own business.

Mr Land explained: “DEMSA ensures that all its member firms have safeguards in place to protect the consumer. All member firms have to keep customers’ money ring fenced in trust accounts and provide a compliance certificate that they are maintained satisfactorily by a chartered accountant. Firms belonging to DEMSA must also pass on clients’ payments to the consumers within five working days.”

Mr Land advised any customer seeking to use a debt management company to look for the DEMSA and OFT logo for reassurance that they are dealing with a reputable firm which is committed to the high standards set out in the DEMSA Code of Conduct.

DEMSA is the only trade body in the sector to have received approval of its code under the OFT’s Consumer Codes Approval Scheme. As the principal trade body in the sector it works closely with the OFT to help promote high standards in the industry.

Membership of DEMSA is reliant upon debt management companies being able to demonstrate that they comply with the standards set out in the DEMSA Code of Conduct. All members are subject to ongoing stringent checks to ensure they adhere to both the Code and OFT guidance.