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Tougher action needed on fee charging debt management companies says Citizens Advice

16 September 2011

A substantial number of fee charging debt management companies are exploiting vulnerable consumers, says national charity Citizens Advice today as it calls on the regulator to impose tougher sanctions on companies flouting the rules.

Citizens Advice Bureaux helped with over 3,000 problems relating to rogue debt management services and credit repair last year (2010-11). The charity reports fee charging debt management companies charging excessive fees, offering vulnerable people inappropriate debt solutions and forcing people further into debt.

In its response to the Office of Fair Trading’s consultation on debt management and credit repair services guidance, Citizens Advice says it welcomes new, clearer tougher guidance from the OFT, but calls on the regulator to ensure it imposes tough sanctions on companies which break the rules.

Citizens Advice Chief Executive Gillian Guy said:

“People already struggling with their finances, trying to do the right thing and address their debt problems, should not be pushed over the brink by unaffordable fees or inappropriate services.

“These guidelines from the OFT set high standards for the debt management and credit repair industry. However, guidelines alone are not enough. In the past debt management companies have routinely flouted the OFT's guidelines, so these will need robust enforcement. The regulator must not be afraid to impose tough sanctions where the guidelines are ignored and to revoke the credit licenses of repeat offenders.

“As the Government reviews the future of consumer credit regulation, Ed Davey needs to make sure that consumers can count on a regulator with the right powers and political clout to deter bad practice and aggressively tackle firms, which treat customers unfairly.

“Citizens Advice Bureaux and other independent debt advice charities provide free debt advice and are able to arrange debt management plans for free.”

Notes to editors:

  1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  3. To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
  4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
  5. Citizens Advice Bureaux in England and Wales advised 2.3 million clients on 5.4 million problems from October 2013 to September 2014. For full 2013/2014  service statistics see our quarterly publication Advice trends
  6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 3,000 service outlets across England and Wales.