Concerns raised over fee-charging debt management plans
After some years of financial pressures, many consumers in the UK have been forced to seek help with mounting debts. But new research suggests many are paying unnecessary fees for help that is readily available for free.
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The survey, by the Money Advice Trust and Lloyds Banking Group, found that 50 per cent of cash-strapped Brits are handing over hundreds of pounds to private companies for the set-up of debt management plans, unaware that there is a fee-free option.
In general, those who had turned to a debt management plan with a private company were unclear as to what they had signed up for, particularly when it came to fees and charges, while one in 10 had even paid fees upfront.
Moreover, the poll suggested that plans set up by fee-charging companies were more likely to end in failure than those that were arranged for free.
The researchers argued that the failure rate of paid-for debt management plans pointed to poorer practices by private companies, and suggested upfront fees should be banned.
Joanna Elson, chief executive of the Money Advice Trust, urged consumers to seek free advice.
She told the Daily Express: "People deal with unmanageable debts in a variety of ways. When people take the brave step of confronting their financial difficulties, we owe it to them to ensure they stand the best possible chance of finding a fair and sustainable way back to financial health."
The National Debtline, Citizens Advice and the StepChange Debt Charity all provide free help.
Have you been lured into a fee-charging debt management plan? Were you aware of the charges applied? Leave your comments below...
