THE Isle of Man company involved in buying gold from consumers and criticised recently by the Office of Fair Trading has agreed to make changes to its working practices.

Postal Gold, one of three companies under fire for their methods of buying gold for cash, have been advised by the OFT to change their business practices.

The companies - which included CashMyGold, based in Manchester, and Cash4Gold, based in west London - were accused of offering misleading information to consumers and in some cases melting down jewellery on the assumption that quotes had been accepted.

The investigation also found that the companies were offering considerably lower sums for the gold than the high street market price.

The OFT found that some businesses were sending customers a payment for their gold, which if not rejected and returned within a very short period of time by customers, was taken as consent for the payment, meaning the gold was then melted down.

Gold-buying companies have become much more prominent in recent times, with many advertising on television or appearing on temporary stands in shopping centres.

Robert McDougall of the OFT said, "We were concerned consumers were being treated unfairly.”

The consumer organisation Which? had discovered in previous investigations that some gold companies advertising on television offered an average of just 6% of the gold's retail value, compared with an average of 25% offered by pawnbrokers and high street jewellers.

The OFT does not have the power to order companies to change their prices, or offers of cash, but it can ensure that businesses provide "clear and transparent" information.

A spokesman for Postal Gold said, "We are pleased that this process will increase the transparency of the industry and that best practices are adhered to by all players which are staying in business.

"Our customers greatly value benefits like speed, convenience and privacy of the transaction, which might not be found in the high street.

“Comparing scrap prices offered by postal gold companies with replacement, retail or resale values obtained from the High Street is like comparing apples with oranges."

The three firms have now agreed to make a series of changes to the way they work, including:

•  Providing people with the option of a quotation for their gold - which the customer would agree to, or withdraw from the deal - or just a payment

•  Clear information on the prices offered, including the weight and carat of the gold

•  Details on whether gemstones can be accepted, and explaining the risks to the customer of sending them

•  Making sure when referring to a "high price" on offer, that they are referring to the scrap price of the gold

Heather Clayton, of the OFT, said that the watchdog would intervene early if new industries grew without proper consumer protection. She added that distance selling could be good for consumers, but only if the businesses operated fairly.

In addition to the postal gold businesses, consumers in the Isle of Man can sell their gold to some high street jewellers or pawnbrokers.

Supermarket Tesco has also just entered the market, but the OFT said it had "not identified any reasons to be concerned with its business practices".