09:51 29 September 2010
Debt management companies have been warned to clean up their act after the Office of Fair Trading found that some were posing as charities.
The regulator found that 129 firms were exploiting their customers, therefore breaking the law and facing having their licenses revoked.
During and after the recession, firms purposefully sought out those who were in financial turmoil to try to negotiate regularly monthly fees for their services.
The Office of Fair Trading (OFT) found through their 11 month review that such companies were charging for advice and solutions to debt problems.
Of these, almost three-quarters were found to charge a fee at the beginning of the consultations this was deemed by the OFT to not be in the interests of the consumer, but for that of the firm.
The report also found that some of those claiming to be experts in advising people on money worries actually had no qualifications in the area.
The OFT has suggested that those looking to gain help in their financial situation should look to free debt management rescue schemes, like Citizens Advice and the Consumer Credit Counselling Services instead of risking talking to private companies.
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