Debtors Who Make Weekly Payments – How Should Distributions Be Made?

After DRF input earlier in the year, OFT released a formal response which means members may under certain conditions retain funds for more than 5 days

Dear Member,

I am pleased to inform members of another example of DRF achieving positive results for our members – and the industry as a whole.

Earlier in the year we had discussions with the OFT about the treatment by creditors of weekly-paid debtors whose contributions were received weekly and, thus, had to be distributed weekly – pointing out that this often led to consumer detriment given that most creditor’s systems only deal with payments on a monthly basis. We wrote formally to the OFT about this and have just received  their formal response which indicates that members may, under certain conditions, retain debtors funds for more than five days and disburse them as appropriate.

This was, in fact, referred to in the OFT’s recently published debt management guidance consultation (prompted by our lobbying on this topic), but DRF waited until receiving the promised letter from the OFT before informing members.

The OFT’s consultation says (footnote 77):

“We are aware of limited circumstances where consumer client’s money may be held for longer than five working days without being disbursed to creditors. Where this is the case,  the contract should specifically provide for this, the relevant contract term should be clearly brought to the consumer’s attention prior to his entering the contract, and relevant creditors should be informed that monies will not be disbursed within five working days, prior to the expiry of the period of five working days following the licensee’s receipt of the consumer client’s first payment”.

Members should note that this is designed to enable debt solution companies to make monthly distributions on behalf of weekly paid debtors and not for any other purpose.

The letter from the OFT gives further specifics and can be downloaded as a pdf from themembers-only forum on the DRF website.

We are very pleased by this and other recent successes, such as DRF’s response to the Citizens’ Advice Super complaint on cold-calling and up-front fees. We are continuing to work hard for members. Our current major concern is, of course, the OFT consultation on the new debt management guidance – you can make your contribution on this and other topics on the members-only forum and we urge you to do so.

Yours sincerely,


David Mond
Debt Resolution Forum Chairman


Leave a Reply

Your email address will not be published. Required fields are marked *