Debt management industry makes tough call on debt
The debt management industry, which has been vilified from all quarters over allegations of mis-selling, will be more tightly regulated in the future
But questions remain as to who will do the regulating, when it will begin and
whether enough will be done to satisfy current concerns.
Philip Long, head of corporate recovery at PKF, says the industry is one that
undoubtedly needs to be regulated because individuals are being fed through IVA
factories when often bankruptcy would be the best option.
Long cites the situation where a financial adviser passes on a client to an
insolvency practitioner without providing adequate advice over the phone, as a
typical problem.
There are several options on the table for regulation. The government argues
that the Consumer Credit Act, which comes into law from next April, will give
the Office of Fair Trading greater powers to watch over the industry. But the
Insolvency Practitioners Association is not content that that will be enough.
IPA chief executive Nick Sabin has concerns over the timeframe in which the
OFT will be able to get round to managing the companies while dealing with
updating 250,000 licenses.
The IPA is now talking with the Money Advice Trust and similar bodies to
establish standards for advice provision instead, which could stretch from
public and voluntary bodies such as the Citizens Advice Bureau, to debt
management companies.
The IPA is also talking directly to debt businesses about an accreditation
scheme that would cover consistent and timely best advice, impartial advice,
training for staff and corporate governance. But nothing has yet been finalised.
