A LOCAL MP who leads a Westminster group on personal finance says a review of debt advice has revealed “disturbing” findings about a “murky sector”.
Makerfield MP Yvonne Fovargue, who is chair of the all-party parliamentary group on debt and personal finance, spoke out following a thematic review of debt management advice by the Financial Conduct Authority (FCA).
The report found firms failed to accurately assess customers’ financial circumstances before making recommendations and often did not point people towards free advice sources.
Vulnerable customers in particular are being advised to take out unsuitable products and services which hinder their ability to repay debts, the report warned.
Ms Fovargue called for extra regulation and welcomed the FCA’s recommendation interest and charges should be frozen if clients agree to a specific debt repayment scheme.
Ms Fovargue said: “This is a welcome, if overdue, review into the workings of this murky sector.
“The results are highly disturbing, but very much as I have always suspected: that fee-charging debt management firms offer a very poor service for customers and create more harm rather than relieve.
“Surely the mistake has been to believe that a public service is simply better when a customer has to pay for it.
“In this case quite the reverse is true. Customers are paying through the nose for a highly unprofessional service.
“These firms are not even mentioning the availability of free advice. Or if they are, they are disparaging it.
“As the review shows, clients would be far better off accessing the free advice sector, where they can be sure of receiving unbiased and valuable assistance.
“Hopefully the FCA will also now consider more robust regulation for the fee-charging debt management sector.”