From Which - Some reasons to avoid Fee charging Debt Management Companies

[citizenB]

There is no date on this, so I don't know how long the information has been available..

 

 

4. Flipping

 

Around eight in 10 people entering into an IVA have already been through at least one other debt solution. Having already received front-loaded fees for a debt-management plan, flipping a customer into an IVA could help a debt company maximise its profits.

 

5. Poor advice from banks

 

The Financial Ombudsman Service (FOS) has received complaints from consumers struggling with debt whose bank has suggested they call a commercial DMC. Which? thinks this practice is unethical and that banks should only be pointing customers towards free alternatives, such as the debt charity StepChange.

 

 

 

9. Cross-selling

 

Some DMCs are part of a group that offers other services, such as loans, PPI and bank charge mis-selling claims and utility-cost reduction. Details of unsuccessful applicants for a loan, for example, may be passed to the debt management arm, while DMP customers are cross-sold other services, such as a current account with a monthly fee. There is no need to take out these accounts – most major banks offer a free basic bank account with no credit facility.

 

 

 

http://www.which.co.uk/money/credit-cards-and-loans/guides/how-to-deal-with-debt/debt-management-companies-why-to-avoid-them/