OFT review to benefit debt management sector

04/11/2009

EuroDebt has welcomed the decision of the Office of Fair Trading (OFT) to review the debt management industry.

Kevin Still, EuroDebt director, said that he was "pleased" by the news and added that the company would be participating in the OFT's consultation.

Rising levels of personal debts among consumers have resulted in a large number of new debt management firms entering the market over recent years.

Figures from EuroDebt suggest that the typical holder of a Debt Management Plan (DMP) has around £29,000 in card and loan debts and eight separate creditors.

The OFT said that its review would look into "non-compliance" with industry rules among some firms - as well as assisting the organisation with targeting its "enforcement action" against malpractice.

Mr Still added: "The Money Advice Trust [MAT] recently produced a report on the fee charging sector and it would appear that the longer established players and those with a large number of established clients, like EuroDebt, have moved with the times, reporting high DMP acceptance rates with creditors and longer retention periods on plan.

"There has been, however, a major influx of new players in the last few years. Many of these are current or former secure loan brokers, networks and packagers. A number of AIM listed Insolvency Practitioners have also extended their range of services to include Debt Management following the introduction of the IVA Protocol.

"Track records vary from one provider to another and we certainly believe there needs to be better clarification and supervision of the sector as a whole with meaningful statistics on the performance of DMPs, much along the lines that we get from The Insolvency Service for IVAs and Bankruptcies. Similar figures are produced in Scotland for Protected Trust Deeds."

The OFT will release results of its research early next year.

Tags; Debt Management and Banking, Credit Card Lifestyle, Recent Graduate Debt,

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