Pressure on rogue debt solution providers increases

13th April 2011

A national newspaper recently launched a campaign to see regulation introduced into the debt solutions industry.

The Mirror has reported that thousands of people have been forced into further debt by rogue providers of debt management plans and other debt solutions such as protected trust deeds. Some debt companies stand accused of making false promises and charging extortionate fees. Such allegations will come as no surprise to regular readers of our trust deed forum where real-life examples of this dreadful exploitation of the financially vulnerable can be witnessed.

The timing of this campaign is important. There are predictions of a fresh wave of individuals finding themselves in serious debt as the squeeze intensifies during 2011. Publicly funded sources of advice, such as the Citizens Advice Bureau (CAB), are facing the threat of having to withdraw services as sources of funding dry up. This is bound to increase the number of individuals consulting commercial providers of debt advice and trust deeds.

The timing also coincides with an Office of Fair Trading (OFT) investigation into the cold-calling tactics employed by some debt solution providers, as well as into the subject of excessive upfront fees. Debt solution companies, including some protected trust deed introducers and providers, will have recently received a consultation questionnaire on this subject from the OFT.

The industry response to the questionnaire will be of surprise to many. A significant number of debt solutions providers, especially those members of trade associations such as the Debt Resolution Forum (DRF), are requesting cold-calling to be outlawed and upfront fees barred. The perception in the responsible area of the industry is that cold-callers and those charging huge upfront fees need to be weeded out in order to protect consumers as well as the reputation of the industry.

There are dissenters. EuroDebt, via Debt Management Today, appear to question whether there is any need to clamp down on cold-calling as a marketing technique. Amongst trade association members however, they do appear to be in a minority.

Anyone considering a protected trust deed or any other debt solution would be well-advised to ignore cold-callers and refuse to pay upfront fees. Other sources of advice are available and tend to carry far fewer risks.

Approaching a regulated direct trust deed provider, using the services of the CAB or a Money Advisor, or seeking advice from only professionally qualified debt advisors are all tactics the public can employ to avoid the less reputable sections of the debt solutions market. Membership of a trade association (such as the DRF or DEMSA) is also a positive sign, although it should not be relied upon exclusively.

There are other simple steps to take to ensure the correct advice is obtained. The first is to take the traditional path of seeking out recommendations, or any other information which gives you reason to trust a particular source of advice. The second simple step is to speak with more than one source of advice so that a comparison can be made between the information on offer and the costs involved.

If you require further information about how protected trust deeds can help you solve your debt problems, look no further than the trust deed forum for information, advice and support.

Trust Deed Latest News