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Which? finds &#39lamentable&#39 standards in debt management

Debt management companies are guilty of a catalogue of questionable selling practices and routinely flout government standards, a Which? investigation reveals.

The Office of Fair Trading produced minimum standards for DMCs in December 2001, but each of the seven DMCs questioned by Which? breached at least one of these standards.

Which? says that DMCs are failing to be up-front about their fees. It says: “Overall the standard was lamentable, with information either being non-existent or buried in the small print.”

All of the companies Which? contacted charge a set-up fee and a percentage of the monthly payment, usually 15% plus VAT. But only three of the seven companies – Accord, Baines & Ernst and Gregory Pennington – set out the initial fee clearly. DMCs should also state the full amount to be repaid, but only Baines & Ernst gave this information.

Helen Parker, editor of Which?, says: “The debt management industry is showing a shocking contempt for the OFT&#39s standards. People in serious debt are desperate and vulnerable, and it&#39s far too easy for DMCs to take advantage of that.

“In fact there are so many things that worried us that we haven&#39t been able to cover them all in our report.

“It&#39s vital that the OFT takes firm action against these companies now. We&#39re concerned that the number of people struggling to manage their debts could rise significantly if the economic climate changes.”


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