Better regulation on the way for debt management firms?

Posted in 'Dealing with Debt' by Richard Catlin

21 September 2009

Debt management firms could face more formal regulation after the government announced that it is launching a consultation.

There are around 150 debt management firms in the UK, with up to 150,000 people entering into debt management schemes each year. Charities such as the Consumer Credit Counselling Service (CCCS) offer independent advice for free, and have long campaigned for better regulation of firms.

Debt management firms collectively have come under regular fire for a number of dodgy practices undertaken by a few of their number, which are often based on false or misleading claims. Advertisements promising to wipe out ‘unenforceable debts’ earlier this year were just one example where the Office of Fair Trading (OFT) has had to intervene.

The OFT also found six debt management firms guilty of cold-calling customers and deliberately misleading them about both who they were and the fees involved.

A recent investigation by debt charity Money Advice Trust found that the advice given out by some firms was inconsistent and often failed to disclose any costs until the consumer was already some way into any process.

Until now, debt management firms have operated under self-regulation, but the consultation, which is expected to conclude in December and publish its conclusions early in 2010, is likely to recommend statutory regulation.

Whatever the outcome, we’ll be sure to publish the findings as soon as they are known.

You can get free, impartial advice on checkmyfile, tailored to your current circumstances. Our Debt Advice Centre covers everything from short-term cash flow problems through to when debts seem to be spiralling out of control.

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