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Debt management firms forced to pay more money towards debts

22 Mawrth 2014

Following recommendations from Citizens Advice the Financial Conduct Authority has announced paid-for debt management companies must make sure more of consumers’ money goes to pay off debts and tell people about free debt advice.

Citizens Advice dealt with 1,300 problems with debt management companies last year.

Citizens Advice Chief Executive Gillian Guy said:

“Some paid for debt management firms are cashing-in on people’s money troubles and only serve to prolong their debt problems, not solve them.  We helped one person who was paying £38 a month to a debt management firm but only £1 was going to each of her eight creditors the rest was taken in fees.  This shows the crucial importance of listening to the problems Citizens Advice clients are having with companies.  The FCA has acted on our recommendations to make sure more money is going to pay off debts and consumers’ money is protected.

“There is a clear problem with people being signed up to debt plans that are completely unsuitable for them.  By making firms tell customers about free debt help available the FCA is recognising the importance of the free, independent advice that Citizens Advice provides.  This will help people make informed decisions and avoid unnecessarily spending hundreds or thousands of pounds on fees, money which could have gone towards paying off their debts.

“You do not need to pay for debt advice.  Your local Citizens Advice Bureau provides free, independent advice to can help you get on top or your finances and sort out a repayment plan with the people you owe money to.  You can also help online at www.adviceguide.org.uk

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.