white pound signs on a provident green background

The FCA have revealed they have begun assessing debt management companies, in particular those which charge customers for their services. Last year, the FCA announced they would be looking into debt management firms after concerns about the standard of advice being offered.

However, with the average UK household to be in £10,000 of debt by the end of 2016, what does this mean for people who need help managing their finances?

Debt Management Firms

If you’re struggling to repay your debts, you may wish to consult a debt management firm. These firms give independent advice and help to enable you to manage your debt. They can give you general information or more specific advice based on your individual circumstances.

Some debt management organisations are free to use, whilst some charge for their services.

What’s The Difference Between Free Debt Management Services & Those Which Charge?

The services provided by debt management firms can vary but the main real difference is that you can pay a fee for the services provided by some companies, whilst other companies do not charge fees for the services they provide. For a paid debt management service, you could pay up to £4,000 extra.

Why Is The FCA Looking Into It?

Firstly, the FCA have been looking at this since around September 2014, when they told debt management firms were told to raise their game, whilst in June 2015 the FCA stated that the standard of advice was unacceptably low for fee charging organisations.

The FCA will announce their findings and further actions when the assessment period has finished. In their initial assessment of debt management companies, the FCA found the following issues- particularly with the debt management firms which charged for their services;*

  • Not all companies treated people fairly
  • Not all had clear and effective policies to interact with vulnerable customers
  • Vulnerable customers were encouraged to buy unsuitable products and are unable to repay
  • Firms failed to assess customer’s financial circumstances
  • Not all firms make it clear what services they provide or that free advice is available
  • Communications with customers were not always accurate
  • Customer options were not always fully explored

*Information from https://www.fca.org.uk/news/debt-management-firms-still-failing-britains-most-vulnerable-consumers-says-fca

The FCA is the regulatory body for debt management companies and all companies within this sector must go through the assessment process for FCA authorisation. If firms wish to continue to provide a debt management service they must meet their requirements.
The FCA has started to assess the application of fee charging debt management companies to ensure they meet these standards. This may result in a number of debt management firms leaving the industry. If you’ve been affected by this, or fear you may be, the FCA have information on what you can do here.

What Happens Now?

The FCA are currently reviewing the practices of debt management firms through individual firm’s applications for authorisation.

If you’re unhappy with your debt management program, you can speak to Citizens Advice or other free debt advice providers.We have listed some debt advice firms which offer their services for free below.

How To Know If They Charge Or Not If you’re unsure whether a debt advice or management business charge you for their advice, you can check their website or simply just ask them.

If You’re Struggling With Debt

If you are having trouble managing your debt, there is free, independent and confidential help available. You could try:

StepChange offers free impartial debt advice- you can call them on 0800 138 1111 Mon-Fri 8am-8pm and Saturday 8am-4pm or visit their website.

Money Advice Service has free unbiased and independent advice on money management- call between 8am and 8pm Monday- Friday or Saturday between 9am and 1pm alternatively click here.

National Debt Line is run by the Money Advice Trust and offers free, confidential debt advice- call them between 9am and 9pm Monday to Friday or 9.30am and 1pm on Saturday. Their website is here.

If you have a Provident loan and you’re struggling with repayments, there are things you can do.

You should firstly contact your Agent to discuss your circumstances to see what they can do. They might be able to help you to get your repayments back on track. You can also call us on 0800 0284 250.

Alternatively, you can try the free, independent bodies listed below

List Of Free Services

 

Sources

  • http://fca.org.uk/news/helping-consumers-with-debt-management-plans
  • https://www.fca.org.uk/news/tr15-8-quality-of-debt-management-advice
  • https://www.fca.org.uk/news/debt-management-firms-still-failing-britains-most-vulnerable-consumers-says-fca
  • https://www.the-fca.org.uk/consumer-credit-research-debt-management field_fcasf_sector=unset&field_fcasf_page_category=unset
  • http://www.stepchange.org/Debtmanagementcompanies.aspx
  • https://www.fca.org.uk/your-fca/documents/dear-ceo-letters/dear-ceo-letter-debt-management