The Office of Fair Trading (OFT) has refused to renew the credit licences of two debt management companies, and refused the new application of a third.

The regulator said the decisions come as part of its ongoing enforcement work to drive up standards in the sector.

Lancashire-based Welcome Solutions Limited and Manchester-based Debt Connect (UK) Limited had their renewal applications refused, while Cornwall-based trader, Rowena Koning, had her new application refused.

Welcome Solutions Limited, which trades as ‘debtsorters.co.uk’, was found by the OFT to have engaged in unfair or improper business practices, including:

• falsely claiming or implying that its debt advice was provided on a free and impartial basis
• failing to provide balanced information in its advertising literature about the different debt solutions available or clear warnings about the risks of entering into debt management plans
• publishing misleading or false customer testimonials.

Debt Connect (UK) Limited was found by the OFT to have engaged in a number of unfair business practices, including providing misleading and inaccurate information to consumers and failing to implement proper practices and procedures.

The OFT also found that all three traders lacked the necessary skills, knowledge and experience to operate compliant consumer credit businesses in the debt management sector. Rowena Koning’s lack of training and experience meant she would have had to rely too heavily on third party compliance support. This view was confirmed by the First-Tier Tribunal (Consumer Credit), which dismissed Mrs Koning’s appeal against the OFT’s decision not to issue her with a licence.

Since the OFT’s 2010 review of the debt management sector, over 100 businesses have exited the market or been refused licences to enter the sector.

David Fisher, the OFT’s director of consumer credit, said: “The OFT will not hesitate to refuse licences to those who cannot establish that they are fit to operate a debt management business and we will revoke existing licences when necessary.

“Our goal is to ensure that people in financial difficulty who pay for debt advice can be confident that they are dealing with businesses that are competent to give them good advice.”