However, if you Google the names of three big charities that provide debt support – Citizens Advice, the Consumer Credit Counselling Service (CCCS) and National Debtline – you'll see a host of paid-for adverts for fee-charging debt management companies on the results pages.
Many of these are using names that sound close to those of the charities – Citizens Debt Advice, National Debtline UK and National Debt Helpline. As such, they can only be viewed as cynical attempts to cash in on people's debt problems by attempting to affiliate themselves with the charities.
A profitable businessAs our personal debts rose in the noughties, more and more of these debt management companies sprang up, sensing the money they could be made.
I should acknowledge that there are some good companies out there who do their very best to find the right solution for people. But continual reports about debt management companies giving incorrect and inappropriate advice, often with a 'one size fits all' approach, suggest they are in the minority.
Is the OFT crackdown working?Last year, the Office of Fair Trading (OFT) began a crackdown on rogue debt management companies, following a super complaint from Citizens Advice.
Since then, it says it has issued 129 warnings to companies, of which 87 have either left the industry voluntarily or been shut down.
In March, the OFT issued revised guidelines to "businesses offering debt management advice or credit repair services".
Examples of unfair practices it identified include:
- Sending unsolicited marketing text messages, email or voicemails.
- Providing inappropriate financial incentives to staff giving debt advice, which may encourage them to promote unsuitable debt management products for personal gain.
- Making false or misleading claims regarding the status of the business, for example operating websites which look like the website of a charity or a Government body.
The first practice is still widespread, certainly in my email junk mail folder. And so is the third, as
I highlighted at the start of the article, particularly in terms of the names being used. We wrote about the latter practice in April this year, but depressingly it still continues.
The OFT told me: "We cannot comment on specific ongoing investigations, but the OFT continues to monitor the debt market closely and will take both informal and formal action when appropriate. A number of licensees have voluntarily stopped using misleading trading names following OFT intervention, and formal enforcement action has been taken to stop a trader using the name The Insolvency Helpline."
Where to find free adviceThere is no need to pay for debt advice. The three charities mentioned at the start of the article all have professionally-trained staff who can help you in confidence and for no charge.
You can find out more about the free help out there and how you get in touch with the different organisations in Where to get free debt advice.