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People in debt being 'exploited' by rogue advice companies

People who are struggling with massive debt are having their situation made worse by ‘rogue’ Debt Management Companies who exploit their difficulties with high fees, poor advice and dishonest information.

Publishing a new report today, Citizens Advice Scotland reveal the ways in which such companies operate, and urge people who are in debt to avoid them and seek free advice from the CAB instead.

CAS Chief Executive Lucy McTernan says,

“The number of people who are in debt has rocketed over the last few years. As incomes fall, many households are simply unable to cope with the rising cost of living, and so many have got themselves into debt as a result.

“One of the results of this has been a growth in Debt Management Companies – organisations who offer to help those who are in debt and sort out their finances in return for a fee.

“Whilst some of these companies can offer support, others take advantage of people who are at their most vulnerable. In effect they are exploiting people who are already struggling.”

The CAS report today lists three main ways in which ‘rogue’ Debt Management companies are exploiting their clients. They are:

  • Providing misleading information about their services, e.g. falsely claiming to be a charity or a government service;
  • Providing inappropriate advice, which often makes things worse for the client; and
  • Charging high fees (often for very poor services).

Lucy McTernan continues:

“The main message we’d want to get across to people is that there is in fact no need for them to employ the services of a debt management company at all. Everything that these companies offer is done by the CAB, who provide free, confidential, independent and impartial advice to help people deal with their debts and get back on their feet.

“It is hugely important that everybody in debt has access to the best possible free debt advice. We therefore call upon the UK and Scottish Governments to provide adequate resources for free debt advice to help as many people as possible.”

Today’s CAS report, Debt Management, can be read in full here.

For more information, interviews etc please contact Tony Hutson on 0131 550 1010.

NB This is the number of the CAS Press Office, for use by journalists only. If you are a member of the public looking for CAB advice please contact your local bureau.