Committee of Public Accounts

Press Notice No. 34 of Session 2002-03, dated 9 July 2003


Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, today urged the Office of Fair Trading, the DTI and the Home Office to work together to tighten control to prevent unscrupulous lenders and debt collectors from obtaining a consumer credit licence.

Mr Leigh was speaking as the Committee published its 34th Report of this Session, which examined the performance of the Office of Fair Trading (OFT) in protecting consumers' interests and, in particular, consumer credit licensing, the provision of guidance to businesses and the enforcement of fair trading legislation.

The Committee found that it is still too easy for unsuitable people to obtain a consumer credit licence. The OFT has been slow to act on the views of our predecessor Committee that it was too easy for people such as unscrupulous lenders and debt collectors to obtain a licence. The OFT discounted our predecessor Committee's suggestions for strengthening checks on the identity of applicants but promised to introduce postcode-matching software to improve its checking. It was only in March 2003 that it piloted a new application form to secure the full benefits of this software.

The OFT has done little to prevent people with previous criminal convictions from obtaining a licence. The OFT still does not have routine access to centralised information on criminal convictions to check against applicants for consumer credit licences. Such information is in the public domain but the OFT can only readily access it from the Police National Computer or the Criminal Records Bureau. The authorities responsible for these systems have given apparently contradictory reasons for refusing the OFT routine access to the data. In the spirit of joined-up government the Home Office and the Department of Trade and Industry should work together with the relevant agencies to resolve this contradiction, and to provide the OFT with routine access in the interests of consumers.

The rising trend in the number of complaints suggests that unfair contract terms are a serious problem area for consumers. The OFT has concentrated on specific market sectors and has also reduced the backlog of long-standing complaints that concerned our predecessor Committee. But there remain a significant number of cases over two years old outside the specific market sectors. It should eliminate this backlog as well as maintaining its drive to tackle contracts before they give rise to complaints.

Mr Leigh said today:

"It is worrying that there is still far too little control to prevent unscrupulous lenders and debt collectors from obtaining a consumer credit licence. The Office of Fair Trading must make sure it reaps the benefits of its postcode-matching software in checking applications, and work with the Home Office and the DTI to get much needed access to information on criminal convictions."

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