Debt Relief Industry International Debt

UK Debt Settlement Company Loses License to Offer Debt Relief Help

Written by Steve Rhode

The Office of Fair Trading in the UK has eliminated a debt relief company license to offer debt help.

The OFT has decided to revoke the credit licence of First Step Finance Limited (FSF), a large debt resolution company based in Stockport.

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.

An overall theme of the OFT’s Debt Management guidance is for businesses to be transparent so that consumers have all the information necessary to make informed decisions about the most appropriate debt solutions for them given their financial circumstances.

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The OFT reviewed the debt management sector in 2010 and subsequent intervention has resulted in over 100 businesses exiting (or being refused entry to) the debt management market.

David Fisher, OFT Director of Consumer Credit, said:

‘People in debt are often vulnerable and are entitled to expect the highest levels of integrity and transparency from debt management businesses. First Step Finance did not meet the OFT’s exacting standards or its legal obligations so we are removing their licence.’

FSF can appeal the determination. Until such time as the appeal process is at an end, FSF remain licensed to engage in credit activities by the OFT.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • Thanks for sharing. The blog is very helpful and informative.I believe most of the people will go for this loans as they are the life savers at some situation, Seek debt assistance with IVA debt services from financial institutions and repay your debts in an affordable and controlled way. I know a place which provide these loans without any hassle and you can get these loans as soon as possible with them.

  • What should we do?We are currently clients of first step finance and wondered whether we should leave before the decision about the license is decided?

    • If you feel as if you have been fairly represented by FSF and you feel the fees charged are reasonable, then you might consider staying.

      The OFT has leveled some accusations at FSF that allege FSF was not transparent with consumers and clients about the risks faced with a debt settlement approach.

      You may want to contact some other debt relief companies and get a second opinion about your current situation. I would suggest you have your FSF client agreement on hand when you contact other companies.

      There are two issues that you should focus on. Is FSF charging you fees for services prior to them actually settling your debts? If so, that practice is further delaying your ability to settle with your creditors.

      Second, you should evaluate how long it will take to deal with your debt using this approach. If you were eligible for a Debt Relief Order or even a consumer bankruptcy, that might allow you to eliminate your debt quickly and start over.

      Have you been satisfied with the services FSF has provided you?

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