OFT shuts down over 60 rogue debt management firms
The OFT has cancelled the licences of 62 debt management firms in the past year. Others have been ordered to stop cold calling customers, or stop pretending to be charities.
The fee-charging firms in question have been slammed for misleading customers about their charges and for giving incompetent advice. The action comes after the OFT issued warnings to 129 firms last September.
Debt management firms have to be licensed under the Consumer Credit Act in order to offer their services to people who have serious debt problems. The firms have had their licences taken away, been refused licences, or have surrendered them to the OFT.
"The OFT continues to take enforcement action against debt management companies where we find evidence of wrongdoing," said a spokesman. "Lesser enforcement action has been taken by the OFT in respect of a further four licence holders."
If you have financial worries and are approached by a firm offering to help, be very suspicious if they charge a fee for the service. When you are in debt, as much as of your income as possible needs to go to clearing it, so it rarely makes sense to pay for debt management or consolidation as it can prolong the time you are in debt or in some cases, take you further into the red.
The first stop should always be debt charities who offer free and independent advice, such as Citizens Advice, the Consumer Credit Counselling Service or National Debtline.