http://www.moneyadvicetrust.org/content.asp?ssid
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Friday 28th January 2011
FIT FOR PURPOSE?
Commenting on today’s announcement from the Office of Fair Trading (OFT) regarding debt management companies, Joanna Elson OBE, Chief Executive of the Money Advice Trust, said:
The news that 50 debt management companies have failed to meet the OFT’s requirements to keep their licence is further evidence that the fee charging debt management industry is not fit for purpose. The OFT originally investigated 143 companies, more than a third of which have been unable to respond to the OFT’s concerns about their poor practices. It will be difficult for consumers to put their faith in this type of company knowing just how widespread these poor practices are.
“We have heard fee charging debt management companies claim their industry is necessary because not-for-profit providers are unable to meet the demand for help. But the OFT’s investigation makes it crystal clear that much of the fee charging industry is not in a fit shape to be trusted to fill that gap.
“We are also concerned that many people turn to fee charging debt management companies from a position of forced ignorance, unaware of free independent debt advice such as National Debtline or Citizens Advice since charities don't have the advertising budget of the fee-chargers. That's why we believe that all licensed debt management companies should be obliged to inform customers of free, independent alternatives.
“Dealing with unmanageable debt is a difficult problem that leaves many people vulnerable. It is vital that people who take the brave step of trying to repay their debts and get on top of their finances are helped back to financial health, rather than preyed on by commercial organisations eager for a quick profit.
“I would advise anyone with concerns about their financial circumstances to seek free, independent advice from agencies such as National Debtline, Citizens Advice or CCCS.”
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