OFT Debt Management guidance does not go far enough and clarity still needed on how many DMPs are out there
Frances Coulson, R3 President, comments:
“R3 welcomes the OFT’s revised Debt Management Guidelines for businesses offering debt management advice or credit repair services, but believes more should be done to ensure Debt Management Plans are properly regulated.
“Research by R3 has shown that 35% of individuals in a Debt Management Plan (DMP) said other options for dealing with their debt, such as an Individual Voluntary Arrangement (IVA) or bankruptcy were not discussed with them before they started their DMP.
“The research also found a significant proportion of those in a DMP ended up in an IVA or bankruptcy anyway - thereby prolonging financial distress.
“While DMPs can play an important role in offering a manageable solution to individuals who are able to pay back their debts there is more to be done. Crucially, we need to know how many people are in a DMP. Recent research by R3 revealed that over 2 million said they were currently in a DMP.
“Difficult economic conditions are leading to more people struggling and indeed recent research by R3 has found that 39% of respondents are concerned about their current level of debt – this equates to 18 million people. What is even more worrying is that 25% of people do not think it is clear where to go for impartial, good debt advice. Some clarity is urgently needed in this area as an online search for debt advice could easily lead to a provider with a vested interested in ‘selling’ a particular product.
“We have seen huge numbers of personal insolvencies in 2011 and so undoubtedly more people will find themselves in need of advice. For this reason we are pleased that steps have been taken to further regulate the debt management market but feel that more can be done. There needs to be an official record of how many people are in DMPs so we have an accurate picture of the current personal debt landscape.”
For further information please contact:
Will Black, Communications Manager
T: 020 7566 4215 m: 07917 422 485 e: email@example.com