THE CITY regulator yesterday criticised debt management firms for providing advice of “unacceptably low” quality.
The Financial Conduct Authority (FCA) found firms were failing to adequately asses customers’ circumstances, not making clear the type of service they provide, and encouraging vulnerable customers’ to buy products which impeded their ability to repay debts.
In one case, a customer of a debt management firm was recommended a plan that would take 125 years to pay off.
“People who turn to debt management firms do so as a last resort. When they find themselves in this position it is vital that they are able to access suitable advice that allows them to make informed decisions about their future,” said Linda Woodall, acting director of retail supervision at the FCA.
“Debt Management firms play a critical role in the consumer credit market, but far too many are not meeting the standards we expect and we will be looking for significant improvement.”