Government to set up Consultation to look into Debt Management Companies

Many people who are in debt contact debt management companies.
These companies will negotiate on their client’s behalf and agree with the creditors to make smaller monthly repayments, usually over a longer period and sometimes freeze interest and charges.
Up to 150,000 people use these services every year and for a lot of people in debt this can be a lifeline.
However, lenders are under no obligation to accept lower payments and do not always help customers in severe difficulties.
Debt management companies charge a fee for their services which can be very costly and this is not always fully explained to or understood by their customers.
Citizens Advice and National Debtline will help people draw up plans to approach borrowers for free.
It is estimated there are 800 debt management companies operating in the UK and these are not currently regulated.
The Government has set up a consultation to look into the need for regulation and to see if customers are getting the appropriate help and advice to deal with their debts. As it stands these companies are able to behave and charge as they wish acting under no law or guidance.