Debt management companies are fee-charging firms that provide advice and solutions to consumers with debt problems.  Entirely separate from fee charging debt management firms are free debt advice services provided by independent agencies, such as Advice4debtNI.

Consumers contacting fee-charging debt management companies tend to be over-indebted, vulnerable and desperate for help with managing their financial difficulties.

The key findings to emerge from the review are that:

• misleading advertising is the most significant area of non-compliance, in particular failing to disclose a fee is retained by the business and misrepresenting debt management services as being free when they are not
• frontline advisers working for debt management companies are lacking in competence and are providing poor advice based on inadequate information
• there is low industry awareness of the Financial Ombudsman Service (FOS) rules for resolving consumer complaints.

The OFT have set out a detailed action plan to improve standards across the industry, focusing on robust enforcement action against licensees that fail, or refuse, to change advertising and/or behavior.

Ray Watson, Director of the OFT's Consumer Credit Group, said:

'People who are heavily indebted, desperate and vulnerable need advice which makes their problem better not worse and should not be exploited. Debt management firms must be clear about their charges and the options available to customers.

'The level of non-compliance we found across the industry is unacceptable. If any of the 129 firms identified do not improve their standards substantially they will be the subject of licensing action by the OFT.

If you are currently liaising with a fee-charging debt management company and would like further information in respect of the free, confidential, independent services provided by Advice4debtNI, call us on 0807 917 4607.