‘Fee-charging debt advice companies exploit people in financial distress’, claims Joyce

‘PEOPLE in financial distress tend to stick to the first organization that offers them help and this tips the scales towards fee-chargers with the biggest budgets and most aggressive advertising, even when a free option is available’. This is the view of Labour Assembly Member Joyce Watson.
The Mid and West Wales AM raised concerns about fee-charging debt management companies in the National Assembly for Wales on Wednesday (2 March).
Mrs Watson said:
“The Westminster Government has caused considerable confusion and anxiety over the future of the financial inclusion fund, which helps fund free face-to-face debt advice services. This resulted in Citizens Advice issuing redundancy notices to 900 of its staff, including 500 money advisers.
“There continues to be real uncertainty over the future of the programme, especially as the UK Government has announced its intention to move towards a “more flexible and cost-effective response to debt problems”—which we all know is Tory-speak for cuts”, she said.
Citing a recent industry probe into whether fee-charging firms were misleading and exploiting clients, which resulted in thirty-five UK firms being closed, Mrs Watson said enforcement action was long overdue and argued that the Office of Fair Trading (OFT) should strengthen its licensing of debt management companies and ensure more rigorous enforcement of regulations:
“People in financial difficulty can feel extremely stressed and isolated and this can make them particularly vulnerable to unscrupulous money lenders and ‘debt managers’.
“Organizations like Citizens Advice Bureau and the Consumer Credit Counselling Service offer free, impartial advice, which is crucial, especially at a time when unemployment is on the rise and many people are anxious about the near future.”
In response, the Social Justice Minister, Carl Sargeant, said the Assembly Government would work alongside the voluntary sector and the public sector to mitigate the worst effects of Westminster spending cuts.