The Office of Fair Trading (OFT) is today announcing a formal consultation on the draft guidance on fitness and requirements for holders and applicants of Consumer Credit licences, as well as simultaneously consulting on a draft statement of policy on civil penalties for failure to comply with requirements.

Following reforms of the consumer credit legislation, the OFT is issuing revised guidance on how it will decide whether a person is fit to hold a Consumer Credit licence, and how the OFT will exercise its power to impose requirements on licensees. The OFT's powers have been strengthened by the reforms and this new guidance explains how the OFT will identify those individuals and businesses that pose greater risks to consumers, then remove or refuse their consumer credit licences.

The guidance also outlines how the OFT proposes to use its new power to impose requirements. These may be used on licensees when the OFT is dissatisfied with their conduct or any other matter relating to the licensed business Failure to comply with the requirements could result in civil financial penalties - and the OFT statement of policy on financial penalties sets out how the OFT proposes to use this power.
 
The general fitness guidance also explains how the OFT will:

• work with Local Authority Trading Standards Services to check that licensees have the skills and knowledge needed to carry out the activities covered by the licence to a reasonable standard,
• issue most standard licences on an indefinite basis, instead of every five years, but using the improved investigation and information-gathering powers to request information from traders at any time while they are licensed. In certain circumstances, the OFT can also obtain a search warrant to enter premises and seize documents. Currently information is only requested at the application stage or during investigation.

Ali Nikpay, OFT Senior Director, said:

'The draft guidance and statement of policy explain how the OFT will use its stronger and more flexible powers to take targeted action and improve the functioning of the consumer credit market. We welcome views of stakeholders on the approach that the OFT is taking.'

The consultation period will last for 12 weeks and end on 21 September 2007. The final versions of the guidance and the statement of policy, together with a report on the responses, will be published on the OFT website at the end of the year.