MAT > Media centre > News > Fee-charging debt management industry “has been tested and found wanting”

Fee-charging debt management industry “has been tested and found wanting”

The Financial Conduct Authority (FCA) has today announced the results of its thematic review of the debt management industry, finding that fee-charging debt management firms are “still failing Britain’s most vulnerable consumers”, with the quality of advice provided by some firms “unacceptably low”.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, commented:

“The fee-charging debt management industry has been tested and found wanting.  The FCA’s report confirms what those of us on the front line of free debt advice have long known – that many fee-charging debt management companies are failing to give the right advice and making bad debt problems worse.

“These firms’ profit-driven approach means they have a clear incentive towards recommending debt options that generate them income, even when this is not in the best interest of the debtor.  In contrast, free, independent debt advice services such as National Debtline can be trusted to give people the best possible advice for their individual circumstances.

“The FCA is absolutely right to crack down on these practices as part of its authorisation process, and to expand its work in this area to other firms.

“Our message to anyone who is struggling with debt is simple – there is never any need to pay for advice. The best thing you can do is seek free advice from charity-run services such as National Debtline as early as possible.”

On the FCA’s findings on fee-charging firms talking down free debt advice:

“It comes as no surprise that the FCA has found that many fee-charging debt management companies are failing to inform people who turn to them for help that free advice is available – and in some cases, making derogatory comments about the free sector in an attempt to keep their custom.  This amounts to taking advantage of people who are often in a very distressed situation, and the FCA is rightly taking this into account as firms go through the authorisation process.”

 

 
© Money Advice Trust Charity Number 1099506
site by rubbaglove