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The OFT has reached this decision because, among other matters, the company:
- was not sufficiently transparent when describing its services, including in sales calls
- failed to comply with OFT Debt Management Guidance, the Consumer Credit Act and other consumer legislation
- demonstrated a lack of integrity.
FSF's business model relies in part upon negotiating 'full and final settlements' for its clients. Under this model consumers make regular payments to FSF and build up a fund, which the company then uses to make offers to creditors in an attempt to settle and repay their debts. The OFT found that FSF's advertising, marketing and other information failed adequately to highlight the risks associated with this business model. For example, FSF did not adequately inform consumers that there could be a long period of time when their debt would not substantially be reduced, potentially creating further arrears. FSF also failed adequately to inform consumers how its services operated, or the costs involved, so that customers might not appreciate the possible financial consequences should they exit a scheme early. Leaving a scheme early could mean that the customer's debt was not effectively reduced, with the associated risk of further arrears and charges. Elements of FSF's advertising and pre-contract information also failed to comply with OFT Debt Management Guidance, including the principle that advice should be given in the best interests of the consumer.....Read more here at OFT: First Step Finance not fit to hold licence