Helping consumers with debt management plans

Published: 13/01/2016     Last Modified: 10/03/2016

We are aware of a number of debt management firms leaving this sector. These changes may affect consumers with debt management plans and we are taking steps to help them.

Consumers who need advice on their debt management plan can contact the Money Advice Service. It is a free and impartial service set up by the government. You can contact them online at www.moneyadviceservice.org.uk/debt-management or by phone on 0300 330 2222. Calls cost no more than to a standard UK-wide number.

Our authorisations team is currently assessing the applications of a number of debt management firms.  Only those firms that can demonstrate that they can meet the required standards will be permitted to carry on debt adjusting or debt counselling.

We refuse to authorise firms that do not demonstrate that they meet our minimum standards or follow our principles, particularly in relation to treating customers fairly. Firms without the relevant permissions should not carry on debt adjusting or debt counselling.

Since the beginning of the application period, over 100 of the firms that applied for authorisation from the FCA have either withdrawn their applications or been refused authorisation. We announced on 10 March 2016 that we had refused authorisation to a large debt management firm with more than 16,000 customers.

As a result of the changes occurring in the debt management sector, consumers may be informed that their debt management plan has been impacted, for example, that it has stopped or moved to another firm.

We are working with firms to try to make sure they provide good communications to any customer whose debt management plan will be impacted by the changes that we have mentioned. We have already written to all debt management firms to remind them that they must contact us if they are planning to sell customers’ details or contracts to another debt management firm.

To help consumers with debt management plans get advice and help we are:  

  • working closely with the Money Advice Service and other consumer groups to help increase advice and support for consumers with debt management plans
  • in contact with debt management firms, trade bodies, banks and creditor organisations to ensure that customers who have been impacted are treated fairly
  • writing to customers of firms which no longer have the relevant permissions with advice.

Consumers often use the services of debt management firms when they are most desperate. We are concerned they may find anything affecting debt management plans upsetting and unsettling. The Money Advice Service will be able to discuss their situation with them for free and could help them to set up a similar arrangement to manage debts.

When we reviewed the debt management market in 2015 we found a range of problems which caused us concern. We are now focusing resources on to this sector because it deals with some of the most vulnerable consumers. Our aim is to ensure that these consumers are treated fairly and provided with good advice to help them manage their debts.

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